Spanish Prime Minister Rajoy faces growing election calls

Spain's Ciudadanos party upped the pressure on Prime Minister Mariano Rajoy on Monday, intensifying calls for snap elections after a proposed no-confidence motion roiled markets last week.

The country's fragmented parliament is expected to accept the no-confidence motion by the Socialists as soon as Monday, but it may be hard to gather the 176 or more votes necessary to oust Rajoy, who survived a no-confidence vote last June.

A date for the parliamentary vote has yet to be decided by the speaker, but opposition parties are taking advantage of Rajoy's weakness after dozens of people linked to his People's Party (PP) were convicted of crimes including influence-peddling and falsifying accounts in a long-running corruption trial.

The PP has closed ranks behind Rajoy, who said on Friday he intended to serve out his four-year term and that the corruption convictions did not affect a single member of his government.

Ciudadanos ("Citizens"), which is ahead in the polls and the most likely to win a snap election, has said it would be willing to work with the Socialists to support a neutral candidate to oust Rajoy, whose minority government has been damaged by a crisis sparked by a Catalan independence vote.

VOICE OF PEOPLE
The leader of the liberal party, Albert Rivera, said in an interview with El Mundo newspaper on Monday that Rajoy's government was weak and tainted by the corruption convictions.

"The only democratic and dignified way out is to give voice to the Spanish people so that they choose a new government and parliament," he said.

After last week's moves, bond and stock markets calmed on Monday as news from Italy that a eurosceptic coalition was unable to form a government led to a relief rally across the euro zone, particularly in southern Europe.

Spanish government bond yields came off 2-1/2 month highs hit last week, while Spain's IBEX rose 0.7 percent after falling sharply on Friday.

Financials and utilities led the recovery, with Santander , BBVA and Caixabank the top gainers, along with Iberdrola and Gas Natural.

The yield on Spain's 10-year government bond yields was a basis point lower on the day and 7 bps below last week's high at 1.45 percent.