Spanish stocks close down 3.6% after inconclusive election

Spain's Ibex 35 index of most traded shares closed down 3.6 percent on Monday following an inconclusive election that has left the eurozone nation struggling to form a government.

All 35 stocks closed in the red putting the index at 9,365.80 points. Bank stocks and those of companies which are highly dependent on government business were the hardest hit with Santander, Europe's biggest bank by capitalisation, down 4.85 percent.

State-rescued lender Bankia lost 5.10 percent while Caixabank, Spain's third-biggest bank by market value, saw the biggest drop, plunging 7.44 percent.

Airport operator Aena fell 7.02 percent and energy firm Endesa shed 5.30 percent.

Spain is grappling with the need to form a stable government following weekend elections that saw the incumbent conservatives score the most votes but not gain a majority, tailed by the long-established Socialists and upstart, far-left Podemos.

"The inconclusive outcome of Spain's general election increases the related risks of prolonged political uncertainty, and potentially a looser fiscal policy stance and/or a reversal of structural reforms," Fitch ratings agency said in a statement.

"If the outcome is a weak government or one reliant on more radical parties, some roll-back of previous reforms and fiscal loosening could result," it added.