SPAIN'S Socialist prime minister met the leader of the main conservative opposition yesterday evening to discuss the economy and aid to Greece, the first formal meeting between the two men since October 2008.

The meeting came as Spain seeks to distance itself from the Greek credit crisis and convince markets there is political will to push through painful austerity measures to cut Spain's budget deficit from 11.2 percent in 2009. “I hope that the meeting allows and serves for the Popular Party to have a more positive attitude ... and it adds to the effort which the whole Spanish society is making, all the institutions,” Deputy Prime Minister Maria Teresa Fernandez de la Vega said.

Yesterday, credit rating agency Standard & Poor's cut Spain's credit rating to AA, saying a longer-than-expected period of low growth could undermine efforts to cut the budget deficit.

At 20 percent, Spain has the highest unemployment in the euro zone and its economy has contracted for seven consecutive quarters. Markets would be likely to welcome any signs Spain's conservative Popular Party (PP) would be prepared to cooperate with the government on deficit cutting and structural reforms as the Socialists have a minority in parliament.