Spain's ruling Socialists suffered a crushing defeat in local elections on Sunday, punished by voters after a week of protests over the EU's highest unemployment level and a stagnant economy.

The Socialists lost municipal strongholds Barcelona and Seville as well as the Castilla-La Mancha region where they have ruled for 28 years, and could end up with clear control of only two or three of Spain's 17 autonomous regions.

The centre-right opposition Popular Party, or PP, had a 10 point lead in the aggregate nationwide vote, the worst defeat for the Socialists in municipal polls since Spain returned to democracy in 1978 after the Francisco Franco dictatorship.

"These results have a clear relation to the economic crisis we've suffered for three years... I know that many Spaniards are going through great difficulties and fear for their jobs and future well being," Socialist Prime Minister Jose Luis Rodriguez Zapatero said in a brief news conference.

Zapatero ruled out calling early elections, saying he would continue to pass legislation to strengthen the economy using existing alliances with small parties in Parliament, where the Socialists are the biggest minority.

But the bigger-than-expected victories for the PP will increase pressure on the unpopular prime minister to step aside before his term is up in March 2012. Analysts said most of the pressure will come from within the Socialist party.