By Tracy Rucinski and Fiona Ortiz
MADRID (Reuters) - Spain is reviewing a ban on protests on the eve of Sunday's local elections to avoid a standoff with the anti-austerity demonstrators who have filled Spain's squares this week, the prime minister said on Friday.
The electoral board said late on Thursday that electoral rules prohibit any campaigning on the "day of reflection" on the eve of voting, as well as on polling day.
"I have a great respect for the people protesting, which they are doing in a peaceful manner, and I understand it is driven by economic crisis and young people's hopes for employment," Jose Luis Rodriguez Zapatero said during a radio interview.
He said the Justice Ministry was reviewing the electoral board's ruling to determine whether it should stand.
Dubbed "the indignant," tens of thousands demonstrating against mass unemployment and deep austerity measures have filled the main squares of Spain's cities for five days, marking a shift after years of patience with a prolonged economic slump.
Spaniards elect over 8,000 city councils and 13 of 17 regional governments on Sunday, and the ruling Socialist party is widely expected to suffer heavy losses over its handling of the economic crisis. The next general election is due in March.
Spain has the highest jobless rate in the European Union at 21.3 percent. The collapse of the construction sector and a slump in consumer spending have hit the young particularly hard, with 45 percent of 18- to 25-year-olds unemployed.
STICKING TO DEFICIT COMMITMENT
Zapatero promised there would be no new round of austerity cuts following the elections, but stressed Spain's obligation to international markets to stick to its plan to cut the deficit.
"I can guarantee there will be no more spending cuts after the May 22 elections (but) we are committed to the budget target. I insist we will meet this obligation because, if we don't, markets and investors won't finance us, and that would make things worse."
Investors are concerned that some regional governments may be hiding piles of debt that will only surface after the elections and could endanger the government's deficit targets.
These fears have grown since Catalonia, which produces almost a fifth of Spain's economic output, revised its 2010 deficit sharply upwards after elections there in November.
Spain has been under intense market scrutiny since Greece and Spain's neighbor Portugal were forced to accept EU/IMF bailouts. It is widely accepted that a bailout for Spain, the euro zone's fourth largest economy, would stretch the European Union's resources and political will to breaking point.
PUERTA DEL SOL
Leaders of the amorphous youth movement were calling an meeting to decide whether or not to accept the ban on protests.
"We still haven't taken an official decision but I can tell you I'm sure we'll stay in the plaza tomorrow," Chema Lopez, a leader of a foreclosure rights group, said as he set off for another day of protests in Madrid.
Many protesters vowed to stay put at Madrid's landmark Puerta del Sol plaza, ground zero of the week of protests.
"They can't kick us out. The politicians won't allow it, it'll make them look bad right before the voting," said 32-year-old Virginia Braojos, a logistics technician who has come with three friends to the protests every night this week.
In the square, thousands of mostly young people spent much of the night chanting, listening to political speeches in small groups, and drinking beer that immigrants sold out of backpacks.
The protests have been organised through social media and Twitter. A few hundred people have been camping in the squares night and day, and the numbers swell into the thousands each evening.
(Additional reporting by Paul Day; Editing by Kevin Liffey)