Spain's governing Socialist Party sustained heavy losses in municipal elections on Sunday, amid widespread protests against high unemployment.
The center-right People's Party (PP) took 37.5 percent of the vote compared with almost 28 percent for Prime Minister Jose Luis Rodriguez Zapatero's PSOE, with more than 90 percent of votes counted.
"The results of the vote show that the Socialist Party has clearly lost today's elections," Zapatero told a news conference on Sunday. "We have suffered a broad setback compared to four years ago."
Zapatero admitted that the economic crisis of the past three years had taken its toll, with unemployment standing at 21.3 percent. The vote was preceded by a week of protests across Spain, with city squares occupied by demonstrators calling for radical changes to the country's political and banking systems.
"These results have a clear relation to the economic crisis we've suffered for three years," said Zapatero. "I know that many Spaniards are going through great difficulties and fear for their jobs and future well being. Today, without doubt, they expressed their discontent."
No plan for early elections
While Zapatero congratulated the PP for their electoral success, he said he had no intention of calling an early general election ahead of the scheduled date in March next year.
PP leader Mariano Rajoy, who is to stand as the candidate to be prime minister in the general election, hailed the result as historic. "This is a beautiful day for our party," said Rajoy. "We've won the best result in our party's history in municipal and regional elections."
Zapatero's party lost the regions of Castilla-La Mancha and Extremadura, traditional strongholds, while conservatives consolidated their grip on the Valencia and Madrid regions.
There was success for the nationalist CiU in Catalonia, to whom the Socialists lost control of the city council in Barcelona.
Separatists gain ground
The radical separatist coalition Bildu became the second largest party in the Basque region, creating alarm among the Spanish press on Monday.
Bildu, which means "together" in the Basque language, fielded candidates in Sunday's election only after a lengthy court battle over whether or not it has connections with the armed separatist group ETA.
According to Spain's leading daily El Pais, Bildu "has redesigned the electoral map of the Basque Country after the best results ever obtained for the 'radical left.'"
The conservative Spanish daily ABC said the "radicalization of Basque politics is the worst news from these elections and could have damaging consequences."
Meanwhile, the radical Basque daily Gara hailed a "new political era."
About 35 million people were eligible to vote in elections for more than 8,000 municipal councils as well as regional governments in 13 of Spain's 17 semi-autonomous regions.
Protesters remain defiant
Across the country, tens of thousands of people have taken part in protests, occupying public squares in Madrid, Barcelona and at least 15 other cities.
The demonstrations have largely been led by young people protesting high unemployment, with almost half of Spaniards aged between 18 and 25 out of work. The statistic is more than double the European Union average.
The demonstrators defied an order by the country's electoral commission to disperse over the weekend, with police ordered not to intervene by the government.
Author: Richard Connor, Spencer Kimball (AP, dpa, Reuters)
Editor: Andrew Bowen