No Spanish government deal seen before key vote on Thursday - source

Prospects of a coalition deal between acting Prime Minister Pedro Sanchez's Socialists and the far-left Podemos ahead of a vote in parliament on Thursday seemed to diminish after a government source said Podemos's demands were unacceptable. If Sanchez is not voted in as prime minister on Thursday, new votes could be held in September. A senior source in Podemos told Reuters: "We're going to September."

But earlier this month, the Socialists said they would give up trying to install Sanchez as prime minister if he fails to win the confirmation vote in July. If there is no government by late September, a repeat election would be held in November. El Pais daily newspaper wrote on its website that the government considered the talks had broken off, but government sources could not confirm that to Reuters.

The vote is expected at around 1430 (1230 GMT) on Thursday and much can still change until then.