Msg#: 3799600 posted 2:01 am on Dec 4, 2008 (gmt 0)
Local country hosting is one good signal - not as good as a separate country-level domain, but it's OK. You can help that process along by setting up the subdomain as a webite in your Webmaster Tools account, and then pick the country target. Local country backlinks will also help you rank locally.
However, whether it's considered spam or not would depend on many things, including the content itself. There are many, many people trying to rank in local country searches today - and Google is not going to just award rankings to all of them. Everything else that makes a strong domain also needs to be in place.