Spain's governing Socialist Party has been returned to power in the country's elections.

But the Socialists were not expected to win an absolute majority.

Prime Minister Jose Zapatero's party was on course to increase its majority from 164 seats in the 350-seat lower house to 169.

But that fell short of a the 176 seats needed to end the hung parliament that has forced them to court smaller parties to pass laws.

Spain's foundering economy dominated the election campaign after 300,000 people became jobless in nine months.

And the shooting of a former town councillor, blamed on terror group ETA, brought the threat from Basque separatists to the top of the agenda.

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