But, Rajoy's departure after six years in office casts one of the European Union's top four economies into an uncertain political landscape, just as another — Italy — pulled back from early elections. Sanchez won yesterday's no-confidence motion with 180 votes in favour, 169 against and one abstention.

He suggested on Thursday he would try to govern until the scheduled end of the parliamentary term in mid-2020. But, it's unclear how long his administration, with only 84 Socialist deputies in the 350-member legislative assembly, can last. With most Spanish parties and Sanchez himself being pro-European, investors however see less broader political risk there than in Italy.

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Anti-establishment parties in Rome revived coalition plans on Thursday, ending three months of turmoil by announcing a government that promises to increase spending, challenge EU fiscal rules and crack down on immigration.