Reuters International

By Maria Vega Paul

MADRID (Reuters) - Members of Spanish anti-austerity party Podemos have rejected joining an alliance with the left-wing Socialists that includes centrist Ciudadanos, increasing the chances of a June re-run after an inconclusive national election in December.

Nearly 90 percent of Podemos ("We Can") members voted against a government based on a pact between the Socialists and Ciudadanos ("Citizens"), results released on Monday showed.

Instead Podemos overwhelmingly supported its leader Pablo Iglesias' call to form a leftist-only alliance, which would cut out Ciudadanos. That route has been shunned by the Socialists.

Spain's four big parties are running out of time to form an alliance. A failure to get enough support to agree on a new prime minister by May 2 would trigger another election.

Neither Podemos, Ciudadanos, the Socialists nor the centre-right People's Party (PP), which won the most votes in the Dec. 20 vote, have enough seats to form a government alone.

Support from Podemos was vital for Socialist leader Pedro Sanchez to get his deal with Ciudadanos done after he failed in a parliamentary vote in March to win over rival parties.

Other options to form a government look equally unpromising, with the only workable two-way alliance, between traditional rivals the PP and the Socialists, further undermined by clashes between their respective party leaders.

The stalemate has yet to fully derail Spain's economic recovery from a deep recession, with activity broadly holding up in the first three months of the year.

But the central bank and analysts have warned that a more prolonged deadlock would take its toll at a time when the country is still suffering from more than 20 percent unemployment and is struggling to rein in its budget deficit.

Most major opinion polls show a new election would do little to fix the situation and would instead replicate the fragmented result after newer parties such as Podemos and Ciudadanos made big inroads for the first time last year.

Spain's King Felipe is due to hold last-ditch talks with political leaders next week to try to resolve the impasse.

(Writing by Sarah White; Editing by Louise Ireland)

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