How will the socialists' handling of Spain's economy differ?

The Ibex-35 index of most traded stocks dropped as low as 7,681 points, from Friday's close of 8,032.

Prime minister elect Jose Luis Rodriguez Zapatero's poll victory has shocked many business experts in Spain.

However, Mr Zapatero has said he does not plan to greatly change the economic course of the outgoing conservatives.

The main Spanish bourse shed 333 points to close down at 7,699 at the end of trade on Monday.

Small surplus

In a reassuring sign to investors, Mr Zapatero has lined up Miguel Sebastian - a leading free market advocate - as the country's future economy minister.

If the socialist manifesto of Mr Zapatero is to be enacted, then the market could be in for a big shock, starting with the banking sector Theodoor Gilissen Securities See how Spain's Ibex-35 is performing

Mr Sebastian is the former head of macro economic research at banking group Banco Bilbao Vizcaya Argentaria (BBVA).

The defeated Popular Party of departing prime minister Jose Maria Aznar watched spending carefully, turning Spain's large budget deficit in the mid-1990s into a small surplus last year.

Mr Zapatero has said he does not favour political intervention in the economy.

Changes...soon

However, European brokers Theodoor Gilissen Securities warned: "If the socialist manifesto of Mr Zapatero is to be enacted, then the market could be in for a big shock, starting with the banking sector."

A former executive at one of Spain's biggest blue chip firms told the Reuters news agency: "The new government will produce changes at the top of the biggest Spanish companies, but not immediately."

The management of some of the country's biggest firms was put in place - directly or indirectly - by the outgoing government during a wave of privatisation in the 1990s.

Samuel Bentolila, professor of economics at the Centre for Monetary and Financial Studies in Madrid, told the BBC's World Business Report: "They (the socialists) have said they will carry out a very orthodox fiscal policy, which they should because we have to keep the deficit low."

He added: "They have also said that they are willing to undertake a few labour market reforms, which we also need. The last challenge I think is in achieving a sustainable welfare state and reducing inequality."

Despite comments from Mr Zapatero's Socialists, designed to calm the markets, some of Spain's largest quoted companies fell in early trade.