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Spain nears vote to oust PM Rajoy; stocks slide

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Spain nears vote to oust PM Rajoy; stocks slide

Spain's conservative government looked set to topple in a no-confidence motion June 1 after a regional party said it would support the vote that aims to install the Socialist Party's Pedro Sánchez as prime minister.

The Ibex-35 stock index closed down 1% after the Basque Nationalist Party said it would back the motion put forward by the Socialists, who argue that Prime Minister Mariano Rajoy has failed to take responsibility for a corruption scandal within his People's Party.

The motion needs 176 votes in the Congress of Deputies to pass and already has the support of the left-leaning Unidos Podemos and Catalan separatists Esquerra Republicana. While a successful vote would hand the Socialists power for another two years, they would be far from a majority, and fresh elections could see the center-right Citizens emerge as the largest party.

Shares in Banco Bilbao Vizcaya Argentaria SA, Bankia SA and Banco Santander SA all fell more than 1%. CaixaBank SA and Banco de Sabadell, whose businesses are based in Catalonia, slid 2.6% and 3.5%, respectively. Sánchez has said he would be open to a dialogue with Catalan nationalists, who attempted to secede from Spain in 2017.