Spain engulfed by anti-austerity strike

MADRID -- Spanish workers enraged by austerity-driven labor reforms to prevent the nation from becoming Europe's next bailout victim slowed down the country's economy in a general strike Thursday, closing factories and clashing with police as the new-center right government tried to convince investors the nation isn't headed for a financial meltdown.

Tens of thousands held protest marches in Madrid and other cities, and the demonstrations turned violent in Spain's second-largest city of Barcelona, where hooded protesters smashed bank and storefront windows with hammers and rocks and set fire to streetside trash containers.

Traffic was slowed in northeastern Valencia when demonstrators lit mattresses ablaze on a highway, and a Molotov cocktail was hurled at a police car in the eastern city of Murcia. Authorities arrested 176 protesters across Spain and said 104 people were injured in clashes, including 58 police officers. There were no immediate reports of serious injures.

The protests came a day before Prime Minister Mariano Rajoy's administration is expected to announce about $40 billion in spending cuts and tax increases to ease fears about Spain's budget deficit. European leaders insist drastic cuts must be made this year even though reductions in government spending are almost sure to boost the unemployment rate of nearly 23 percent, the highest among the 17 nations that use the euro.

The labor reforms make it less costly for Spanish businesses to fire workers, and give them incentives for hiring -- but protesters said they are being forced to give up rights they earned decades ago.

"Why wouldn't I protest?" asked textile worker Jose Jimenez, 60, from the Madrid protest. "I've spent 45 years working for the same company and now they can get rid of me almost for free."

Others said the reforms put in place by Rajoy in February after his conservative Popular Party ousted the governing Socialists in November will only boost the profits of companies and banks.

"Workers are losing all their rights, and the benefits will go only to the banks and the businesses," 57-year-old bus driver Fidel Martin said.

Labor unions said millions of Spaniards in the nation of 47 million stayed away from work to protest, and the strike caused transportation delays and prompted Spain's government-run national health care system to significantly reduce services except for emergency cases. Workers at car factories that assemble vehicles for Renault SA, SEAT SA, Volkswagen AG and Ford Motor Co. largely stayed home, and services at mining and port facilities were also severely limited, union leaders said.

But many other businesses remained open, and Rajoy's government claimed the strike didn't have its intended impact because Spanish electrical consumption dropped only 16.3 percent, not as much as the 16.9 percent reduction when the country's last general strike was held in 2010 when the Socialists were in charge.

Union leaders demanded a "gesture" from the government to scale back the reforms, warning they could cause more unrest starting in May. Members of Rajoy's administration said they are willing to talk with union leaders, but won't issue concessions.

"There is no stopping on the path to reform," Labor Minister Fatima Banez said.

The cuts expected today are designed to lower the national deficit to within European Union limits and reassure jittery international investors who determine the country's borrowing costs in debt markets -- and could well determine whether Spain will follow Greece, Ireland and Portugal in needing a bailout.

Spain's benchmark borrowing rate -- the yield on its 10-year bonds -- continued to creep up Thursday, to 5.4 percent, suggesting increasing investor concern about whether the country can avoid a bailout, one that European leaders and experts say could lead to the breakup of the Eurozone. Spain's economy is twice the size of Greece, Ireland and Portugal.

And the country's benchmark Ibex 35 stock index continued a weeklong slide Thursday, closing down nearly 1 percent and below the psychologically important level of 8,000 points.

Protester Angel Andrino, 31, said he was laid off a day after the labor reforms were approved in a decree last month. He lives with his parents and brother, who is the only employed person in the family, but working part-time.

"We are going through a really hard time, suffering," Andrino said. "The rights that our parents and grandparents fought for are being wiped away without the public being consulted."

Candido Mendez, who leads the General Workers Union, said 77 percent of the union's members were on strike as of midday but said that the rate reached 97 percent in the industry and construction and construction sectors.

While investors are nervous about widespread social unrest spreading in Spain like it has in Greece, Spanish experts predicted doubt that will happen. That's because many Spaniards reluctantly accept that the country needs a radical economic makeover to make it more competitive after it almost certainly heads into recession this year with even higher unemployment.

"The country is in no mood for taking to the streets," said business management professor Jose Ramon Pin of the IESE Business School.

But across Spain, the strike's impact was felt by Spaniards and visitors. Commuter trains ran much less frequently, and air travel was severely disrupted. The country's flagship airline, Iberia Lineas Aereas de Espana SA, canceled 65 percent of its flights. TAP Portugal canceled half of its flights to Spain, and Spanish national airport authority AENA said 402 flights had been canceled by midmorning.

Spanish National Television showed images of police on horseback in Madrid helping buses leaving garages as protesters tried to prevent them from leaving, and state-owned regional television stations in three Spanish regions went off the air because workers didn't show up.

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Associated Press writers Alan Clendenning and Jorge Sainz in Madrid, and Barry Hatton in Lisbon, Portugal, contributed to this report.