After short, tense meeting, Spain's Socialist head rejects backing Rajoy

By Angus Berwick MADRID (Reuters) - The head of Spain's Socialist party ruled out on Friday supporting acting Prime Minister Mariano Rajoy for a second term, support that could have ended the country's political stalemate. Pedro Sanchez, the leader of the Socialists, had met Rajoy for talks to form a government, after elections in December left Rajoy's centre-right People's Party (PP) without a parliamentary majority as newcomer parties grabbed votes from the mainstream. After a half-hour meeting between both leaders, television coverage of which showed Rajoy apparently refusing to shake Sanchez's hand and both avoiding eye contact, Sanchez said he had rejected the proposal of a coalition between the PP and the Socialists. "The Socialists believe that the PP is a very important party in Spanish politics," Sanchez told a news conference. "But it's a party that needs to regenerate and clean itself up, and this will only happen if it is not in government," he said, referring to numerous corruption scandals that have tarnished Rajoy's party. With Sanchez, who came second in the elections, yet to make progress in gathering support, the prospect of fresh elections is mounting. That is something he is eager to avoid - recent surveys show the anti-austerity party Podemos overtaking the Socialists if another ballot were held. Sanchez said on Friday he hoped to reach an agreement over a coalition by the end of the month and would seek a confidence vote in parliament at the beginning of March. Failure in the vote would mean other party candidates would have two more months to form an alternative majority before a new national election would have to be called. Rajoy had taken a step towards Sanchez on Thursday when he said he was open to asking the European Commission for more flexibility on Spain's public deficit targets, a stance shared by all other parties. But Sanchez said he would not alter his preference for a coalition of leftist parties, namely with Podemos. Such a coalition is still far from an agreement. Podemos's leader, Pablo Iglesias, continues to throw up , saying last week he would only start talks with the Socialists if Sanchez abandoned talks with the centrist party Ciudadanos. Furthermore, a coalition between Podemos and the Socialists would still be short of a majority. They would need to strike agreements with regional parties, several of which want a referendum on independence in the Catalonia region that Sanchez opposes. (Additional reporting by Sarah White; Editing by Paul Day, Larry King)