Spain's Socialists Face Slowing Economy

Spain's governing Socialists won a second term in office but will again need the support of smaller parties to reboot a slowing economy and deal with Basque separatists after an election that left the country deeply divided politically.

With 99.9 percent of the vote counted in Sunday's election, Prime Minister Jose Luis Rodriguez Zapatero's party won 169 seats against 153 for the conservative opposition Popular Party of Mariano Rajoy.

The victory, although an improvement of five seats for the Socialists from the 2004 election, left the party seven short of a majority in the 350-seat parliament.

"A Second Opportunity," read the editorial headline in leading daily El Pais, which noted that the result increased the tendency toward a two-party nation.

The Socialists "will have to continue counting on external support," the paper said.

Offers of help came quickly from the Basque Nationalist Party, which won six seats.

"We hope to contribute to his (Zapatero's) government so that together we can find a definitive solution to the Basque Country's political problems," said party president Inigo Urkullu.

The victory came despite growing concerns over a cooling economy, immigration and resurgent Basque separatists. But Zapatero welcomed the win and promised changes.

"The Spanish people have spoken clearly and decided to start a new era," he told supporters. "I will govern by strengthening the things we have done well and correcting the mistakes."

The election was marred by the slaying of a former Socialist party councilor, Isais Carrasco, on Friday by suspected Basque militants.

In his victory speech, Zapatero paid tribute to Carrasco, saying he should have been celebrating the victory.

The timing of the attack was reminiscent of an election-eve massacre by Islamic militants who killed 191 people in a string of bombings against commuter trains in Madrid on March 11, 2004. Three days after that attack, Zapatero won a surprise victory amid a wave of voter outrage at the ruling conservatives, who blamed the attacks on ETA even as evidence of Islamic involvement mounted.

The Popular Party conceded defeat, but took consolation in the fact that their party also picked up seats. But both the El Pais and El Mundo newspapers said the result could lead to Rajoy's resignation as party leader given that it was his second consecutive electoral defeat against Zapatero.

The results were a firm endorsement of Zapatero's policies, which included reforms such as legalizing gay marriage and granting on-demand divorce, once thought unthinkable in the overwhelmingly Roman Catholic country.

Zapatero also withdrew Spanish troops from Iraq after he was first elected in 2004 and launched a drive to cede more power to Spain's semiautonomous regions.

The campaign was marked by acrimony, with Rajoy hammering Zapatero on everything from immigration and Spain's semiautonomous regions to the economy.

All of these issues have left Spain deeply polarized and these divisions will not go away soon, said Enrique Monreal, 35, a publishing company employee.

"It will take several years for things to calm down. Right now it is so tense you are nervous even talking to your neighbor," Monreal said outside a polling station in Madrid.

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AP correspondents Daniel Woolls and Ciaran Giles in Madrid, and Harold Heckle in Bilbao contributed to this report.