Spain's ruling Socialists won a second term in elections on Sunday as voters brushed aside concerns over the slowing economy and soaring immigration and backed the party's liberal social reforms.
But the party of Spanish Prime Minister Jose Luis Rodriguez Zapatero failed to gain an absolute majority and may have to forge alliances with smaller regional parties to govern.
"The Spanish people have spoken clearly and have decided to open a new period without tension, without confrontation," Zapatero told hundreds of exuberant supporters at Socialist Party headquarters in Madrid. "I will govern by improving the things we did well and correcting our mistakes."
Outside, hundreds of people celebrated the victory amid a sea of red and white Socialist Party flags.
With 99.95 percent of votes counted, his Socialist Party was predicted to secure 169 seats, short of the 176 need for an overall majority in the 350-member assembly, against 153 for the conservative opposition Popular Party (PP) of Mariano Rajoy, official figures showed.
In the last legislature, the Socialists had 164 seats and the PP 148.
Turnout was estimated to be 75.3 percent, close to the high of 75.66 percent in general elections four years ago.
In Senate elections, also held on Sunday, the Popular Party lost one seat to 101 of the 208 seats at stake in the 264-seat upper house, with 99.42 percent of the votes counted. Zapatero's Socialists won eight more seats and now have 89 senators.
Analysts had predicted that a high turnout would be crucial for Zapatero's re-election chances.
The record participation in March 2004 had also helped Zapatero, now 47, to score a surprise win over Rajoy, 52, three days after train bombings in Madrid that killed 191 people.
Voters then were infuriated at the conservative government's insistence that ETA was to blame, even though evidence pointed to Islamic extremists angered by Madrid's role in the Iraq war.
Election campaigning was again suspended this time around, after a former municipal legislator, Isaias Carrasco, a Socialist, was shot dead on Friday in the northern Basque region.
There have been no claims of responsibility, but police said the attack bore the hallmark of the Basque separatist group ETA, which has killed over 800 people in its nearly 40-year campaign for an independent homeland.
Spaniards on Saturday received an emotional plea to turn out and vote from Carrasco's daughter, as hundreds attended his funeral.
Pictures of a grief-stricken Sandra Carrasco made the front pages of almost all Spanish newspapers on Sunday, and the conservative press had warned that it could help the Socialists.
"The images ... have provoked a natural feeling of sympathy for the Socialists and Zapatero," the center-right El Mundo said in an editorial.
Meanwhile, the center-left El Pais commented: "Some are already beginning to put out the idea that a bigger Socialist win than predicted by the opinion polls will be due to the killing of Isaias Carrasco."
Rajoy sought to put the best face on the defeat.
The PP "is the party that most progressed in Spain, in terms of votes and seats," he told cheering supporters at the party's headquarters in Madrid.
In regional elections in southern Andalusia, also held on Sunday, the Socialists lost five seats to 56 compared with the 2004 elections but maintained their overall majority in the 109-seat chamber.
The Popular Party won 10 more seats and will now have 47 in the regional assembly.
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