Madrid — Spanish Prime Minister Mariano Rajoy’s hours in office appeared numbered on Thursday after a Basque political party said it would back a no-confidence vote over a corruption case, paving the way for Socialist leader Pedro Sanchez to take power. Support from the Basque PNV party gives Sanchez 180 votes in parliament to become prime minister, more than the absolute majority of 176 votes he would need to take power immediately if the no-confidence vote is held on Friday as scheduled. Rajoy could slow that transition if he were to resign before the vote. Rajoy’s departure would trigger a second political crisis in southern Europe, further unnerving financial markets already wrongfooted by failed attempts to form a government in Italy three months after a national election.

With most Spanish parties in favour of respecting EU fiscal rules, however, investors appeared to see less risk of an abrupt policy shift than in Italy, where parties have thrown doubt on the commitment...

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