MADRID, March 9 (Reuters) - Spain's governing Socialist
Party won Sunday's election and may have secured enough extra
seats for an absolute majority, exit polls indicated.
 

With both parties' policies broadly similar for tackling a
sharp slowdown in economic growth, financial markets would be
likely to welcome a clear outcome as a sign of stability.
 

An exit poll published by Spanish state television gave
Prime Minister Jose Luis Rodriguez Zapatero's party 172-176
seats in the 350-seat lower house, and the conservative
opposition Popular Party (PP) 148-152 seats.
 

Three other polls for private media gave the Socialists
between 163 and 178 seats, with the PP on 142-152. In the 2004
elections, which Zapatero won in a last-minute turnaround, the
Socialists won 164 seats and the PP 148.
 

An absolute majority requires 176 seats so if the Socialists
manage to keep at the top of the exit poll ranges, Zapatero may
not need to court smaller parties to pass laws over the next
four years, as he did in the last legislature.
 

"All the exit polls agree the Socialists have won. It is the
leading party in terms of votes and seats," Socialist party
organisation secretary Jose Blanco told reporters.
 

PP officials said their result could be better than the exit
polls suggested because voters were often unwilling to admit to
voting conservative outside the polling booths.
 
 

MARKET NERVES
 

Most opinion polls in the run-up to the election pointed to
a Socialist victory, but none suggested they might grab an
overall majority.
 

Analysts have said such a clear victory would calm market
nerves about Spain, which is heading into an economic slowdown
after a decade of stellar growth fuelled by low interest rates,
easy borrowing and European Union funds.
 

The economy dominated the election campaigns as 300,000
people joined the jobless queues in the space of nine months,
most of them from the construction sector.
 

Several analysts have cut their 2008 growth forecasts to
about 2 percent after 3.8 percent growth last year and some
worry that things could get worse if property companies start
defaulting on their huge piles of debt.
 

As well as managing a slowing economy, the next government
will have to crack down on the Basque separatists of ETA, who
all parties blamed for the point-blank shooting of a former
Socialist councillor on Friday.
 

The shooting also pushed voters' focus back onto Spain's
sometimes restless regions, and was expected to boost turnout as
voters fought back by exercising their democratic rights.
 

High turnout tends to benefit the left, whose supporters are
typically more apathetic about voting.
 

In 2004, voters turned out en masse and brought the
Socialists to power three days after train bombs that the PP
initially blamed on ETA, but which turned out to be the work of
Islamist militants.
 

Since then, the PP has constantly trailed Zapatero in
opinion polls.