Spain Stocks Down 1.3% amid Election, Economic Fears

Spanish stocks were under pressure on Monday after the ruling People’s Party failed to obtain an absolute majority in a weekend regional election, and amid general economic concerns.

In the country’s biggest region of Andalusia on Sunday, the PP won the elections, but fell short of the 55 seats needed for an absolute majority, meaning the government will likely form a coalition with the United Left party. But the election was viewed as a sign of protest against austerity measures from Spanish Prime Minister Mariano Rajoy.

The government is facing a national strike on Thursday, with the 2012 budget due to be presented on Friday. Over the weekend, Italy’s Prime Minister Mario Monti reportedly that Spain could reignite the euro-zone debt crisis if it doesn’t push ahead with austerity measures.

That was echoed by the European Union’s senior economic official, Olli Rehn, who called on Spain to stick to its deficit targets.

Spanish bonds have been under pressure recently, with the yield on the 10-year government bond now higher than that of Italy’s. Spain’s IBEX 35 (XX:IBEX) -0.86% index led losses in Europe, down 1.8% to 8,134.50. These data have been reported by Market Watch.