Spanish Prime Minister Mariano Rajoy's right-leaning party on Sunday retained power in his home region of Galicia despite recession and biting austerity measures, official results showed.
The result means Rajoy has avoided a political humiliation in a traditional Popular Party stronghold that would have undermined his standing just as he tries to convince world markets that he can fix Spain's finances and economy.
But a second regional election in the Basque Country added to the Spanish leader's challenges as an exit poll showed a new separatist coalition had finished in second place, just after the Basque Nationalist Party which seeks greater autonomy for the region.
The two regional votes came at a critical time for Rajoy, who is agonising over whether and when to seek a eurozone sovereign rescue to finance the nation's runaway public debt.
Rajoy's Popular Party captured 41 seats in the 75-seat Galician parliament, up from 38 seats in the outgoing assembly, official results showed with almost all of the votes counted.
The Popular Party had been defending a tight but absolute majority in Galicia, Rajoy's home region, which has a population of 2.8 million, and opinion polls a week before the elections indicated it stood a good chance of success.
Voters apparently decided to stick with Rajoy's party despite an unemployment rate that has climbed sharply to 21 percent, nearing the national rate of 25 percent.
The economic pain and cuts in education and health are fuelling discontent across the 17 powerful regions.
Those sentiments were especially raw in the Basque Country, which is holding its first regional vote since armed separatists ETA renounced the use of bombs and guns.
The Basque Nationalist Party came in first place having captured 27 seats in the 75-seat Basque parliament, followed by the separatist Euskal Herria Bildu coalition which got 21 seats.
"It is time to start thinking as a people, as a nation. It is time to stop the orders from Madrid," the head of the Euskal Herria Bildu coalition, novelist Laura Mintegi, told a post-election rally in Bilbao.
-- Bildu popularity raises questions of Basque independence --
The Bildu alliance appears to have filled the space left by the ETA-linked Batasuna party, which was outlawed in 2003.
The big question now is whether the Basque Nationalist Party will seek an alliance with Bildu or another party.
Political analysts believe a Basque regional government that includes Bildu will bring questions of Basque independence to the forefront of the political debate.
"If it is with Bildu, the question of (Basque) identity, of ties with Spain, will play a central role in its coalition," said Anton Losada, political science professor at the University of Santiago de Compostela.
The leader of the Basque Nationalist Party, Inaki Urkullu, gave no clues as to what his plans are.
"A new era has started," he told a post-election rally in Bilbao.
The strong showing for Bildu comes as Rajoy faces a surge in support for separatism in the wealthy northeastern region of Catalonia.
Catalonia will vote in regional elections on November 25 and Catalan president Artur Mas has promised to hold a referendum on "self-determination" there if his Convergence and Union party is re-elected.
The election in the Basque Country came one year after armed separatist group ETA announced it was giving up violence.
ETA is blamed for 829 deaths during its four-decade armed campaign for an independent Basque homeland in parts of southern France and in the northern Spanish region, home to 2.2 million people.
Although the Basque unemployment rate is well below the national average, it remains high at 14.5 percent, and central government demands for spending cuts have fed resentment against Madrid.
On October 20, 2011, ETA announced a "definitive end" to its armed activities, but has not formally disarmed or disbanded as the Spanish government demands.
Spanish Prime Minister Mariano Rajoy arrives at a Popular Party's campaign meeting in Vigo, northwestern Spain, on October 19. Rajoy's right-leaning party on Sunday retained power in his home region of Galicia despite recession and biting austerity measures, official results showed.
A man casts his ballot at a polling station in the northern Spanish Basque village of Aia during the Basque regional election. Spanish Prime Minister Mariano Rajoy's right-leaning party on Sunday retained power in his home region of Galicia despite recession and biting austerity measures, official results showed.
Basque regional president Patxi Lopez (R) talks to the media after casting his vote for the Basque regional election. Spanish Prime Minister Mariano Rajoy's right-leaning party on Sunday retained power in his home region of Galicia despite recession and biting austerity measures, official results showed.
A Popular Party candidate for the regional elections in Galicia, Alberto Nunez Feijoo celebrates exit poll results after regional elections in Santiago de Compostela, northwestern Spain. Spanish Prime Minister Mariano Rajoy's right-leaning party on Sunday retained power in his home region of Galicia despite recession and biting austerity measures, official results showed.
