Spain's leftist government called early general elections for November on Friday, a move which had been widely expected to take advantage of improved ratings for the Socialists in the latest polls.
Following are details of analysts' and markets' reaction to Prime Minister Jose Luis Rodriguez Zapatero's announcement.
PROFESSOR AT ICADE BUSINESS SCHOOL JOSE MARIA MARCOS
"As was on the cards, Zapatero has not been able to resist the pressure which has been growing since the last (municipal) elections, when the Socialists were routed.
"Results in November will be really bad for the Socialists, no matter how much Rubalcaba tries to turn himself into a Spanish Obama...The Socialist party is deeply divided."
NICHOLAS SPIRO, SPIRO STRATEGY
"This is no panacea. Whether it's the Socialists with the supports of the Catalans or the conservatives with the support of the Catalans, I don't believe that constitutes any kind of game changing event for the Spanish economy and reforms is concerned.
The caveat is that if the conservatives would get a majority, which is in the realms of the possible, that would be reform positive, in the sense that they would be more willing to tackle the lack of transparency in Spain's regional relations. But you can't turn the clock back. You've had 30 years of strong fiscal devolution and that's here to stay. My immediate comment would be that anything that turns the spotlight on political risk in Spain is negative.
"The problems are centring around the soft core and now it is spreading from the periphery to the core. Spain's problem is that it straddles the risk perception divide which is the soft core of the euro zone and the hard periphery. Spain is the most exposed now.
"Most investors will probably see this to not be overweight Spain. It just adds political risk."
DAVID LEA, WESTERN EUROPE ANALYST, CONTROL RISKS CONSULTANCY IN LONDON
"It's no great surprise. It had become increasingly obvious that the government would struggle to get the 2012 budget through and now it doesn't have to. The opposition People's Party is ahead in the polls and might even get an overall majority, although there is a suggestion they may have peaked. They've been trying to be all things to all men, but they should at least be able to get a budget through.
"That would leave us with virtually no left-wing governments in Europe. It's still not clear what will happen in Cyprus, we still have Greece and then of course there is Norway -- but that of course is an outlier in every way."
DAVID BACH, ECONOMIST AT IE BUSINESS SCHOOL IN MADRID
"I'm not convinced an election alone, even if it creates a fairly stable new government, will calm down markets. What we've seen in the last 18 months is that there are events that have a short-term impact on the markets."
HOLGER SCHMIEDING, CHIEF ECONOMIST, BERENBERG IN LONDON
"(There is) additional nervousness now. Extra short-term risk. (But) it is likely we will get a government with a better mandate to do what Spain really needs, that is more thoughtful labour market reforms."
