By Julien Toyer and Blanca Rodríguez
MADRID (Reuters) - Talks on Tuesday between Spain's king and senior party leaders on forming a government look unlikely to break the country's political deadlock, increasing chances of a new national election in coming months.
King Felipe will meet socialist leader Pedro Sanchez at 1000 GMT (5.00 a.m. ET) and Mariano Rajoy, who is acting prime minister, at 1600 GMT, wrapping up a second round of negotiations that started last week.
Spain has been without a government since inconclusive parliamentary elections on Dec. 20, and it is not clear whether the king will nominate one or other man on Tuesday to lead talks to form a new administration, or ask the parties to negotiate first.
Rajoy was nominated after a first round of talks last month because his conservative People's Party (PP) won most votes in the election.
But he deferred a parliamentary confidence vote on a new government because he lacked the support to win it, and his PP has been lobbying for Sanchez to take the baton this time.
The socialist leader has said he would accept the king's nomination but, having ruled out a coalition with the PP and with senior members of his party opposing a deal with anti-austerity Podemos and regional parties, his chances of success look just as slim.
Asked about Sanchez's intentions, Podemos party leader Pablo Iglesias - who met the king on Monday - said: "When a candidate wants to seek a confidence vote, he must first have an advanced project. It seems to me that this is not the case."
While he did not know what Sanchez or Rajoy would tell the king, he said neither leader had made headway with an offer for a viable government.
Rajoy's PP, which fell well short of a majority in December, would need the unlikely backing - or the abstention - of newcomer centrist party Ciudadanos and the socialists in order to form a viable government.
The socialists, who came second, could potentially achieve a majority by teaming up with Podemos and other leftist and regional parties, but they have different views on fundamental issues such as whether to organize an independence referendum in Catalonia.
Both the PP and Podemos have said they would vote against a possible third option, a minority socialist/Ciudadanos government.
Under Spain's constitution, a two-month deadline for the formation of a government comes into effect once a candidate seeks a parliamentary confidence vote.
If that deadline expires a new national election is called.
With the country's economic recovery still showing strong momentum and politicians facing little or no pressure from financial markets and business leaders to end the stalemate, few would now bet heavily against that outcome.
(Additional reporting by Marta Ruiz-Castillo; editing by John Stonestreet)