Reuters International

People wait in line to cast their ballots during the EU referendum at a polling station in the British overseas territory of Gibraltar, historically claimed by Spain. REUTERS/Jon Nazca

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By Jon Nazca

GIBRALTAR (Reuters) - Spain will seek to jointly govern Gibraltar with Britain following the British vote to leave the European Union, acting foreign minister Jose Manuel Garcia-Margallo said on Friday.

The referendum outcome completely changed the prospects for the peninsula's future, he said.

The peninsula on Spain's south coast, a British territory since 1713 and known to its 30,000 residents as "the Rock", is a major point of contention in Anglo-Spanish relations. Spain has long claimed sovereignty over the enclave.

"It's a complete change of outlook that opens up new possibilities on Gibraltar not seen for a very long time. I hope the formula of co-sovereignty - to be clear, the Spanish flag on the Rock - is much closer than before," Garcia-Margallo said.

Gibraltar voted overwhelmingly in favour of Britain remaining in the European Union on a large turnout.

A spokesman for Gibraltar's government declined to comment on the Brexit vote and referred to previous statements, which noted that co-sovereignty had already been rejected by around 99 percent of Gibraltarians in a referendum in 2002.

The majority of people living in Gibraltar - designated as a British Overseas Territory - are British citizens with British passports, although thousands of Spaniards cross from mainland Spain to work on the peninsula every day.

Garcia-Margallo said Spain would push for Gibraltar to stay out of any general negotiations with the European Union following Britain's exit from the bloc and will aim for bilateral talks to seek co-sovereignity and eventually Spanish control of the peninsula. Britain rejects any notion of Spanish sovereignty against the wishes of Gibraltar's people.

The territory is one of the most prosperous regions in Europe with a thriving economy based on financial services, tourism and Internet gambling.

The mood was subdued in Gibraltar on Friday, with people apprehensive and confused about what the result may mean in terms of ease of movement of labour and capital over the border with Spain.

"MASSIVE SHOCK"

Gibraltar has complained in the past about excessive border controls on the Spanish side of the frontier. Disputes have also broken out between Spain and Britain over fishing in waters around the Rock.

"We're very worried now about what may happen with the border," said Clive, a 54-year-old tax consultant who declined to give his surname, sitting outside a bar in a central square.

"Many companies set up here because it's part of the European Union. We think this result will have a negative effect on the economy."

Aaron Payas, a 31-year-old lawyer at Gibraltar-based law firm, shared concerns over the future status of the territory.

"There is a lot of concern within the financial services sector given the outcome," said Payas, who plays for the territory's soccer team. "The result is a massive shock."

Spain's acting Prime Minister Mariano Rajoy said on Friday that Britain's vote to leave the EU would not affect the rights of Spanish workers, who he said would be able to continue to move freely between the two territories.

Spain itself is facing an election on Sunday, its second in six months after an inconclusive vote in December. Polls forecast a fragmented result with no clear winner, potentially leading to weeks of negotiations over the formation of a coalition government.

(Additional reporting by Angus Berwick, writing by Sonya Dowsett, Editing by Julien Toyer and Angus MacSwan)

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