Pedro Sanchez, said here on Wednesday that his party would not support the inauguration of acting Prime Minister Mariano Rajoy for a second term in office.
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The opposition Socialists won 90 seats, followed by the far-left Podemos with 69 seats and the centre-right Ciudadanos with 40.
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Ahead of the meeting the leader of fourth-placed newcomers Ciudadanos, seeking to cast his party in the role of kingmaker, called for a three-way pact.
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The result leaves Spain facing weeks of hard talks to try to form a government and has unsettled financial markets. The results broadly confirmed what many had predicted: a win for the incumbent government of Mariano Rajoy of the conservative Popular Party (PP), but uncertainty over whether Rajoy will be able to form a government.
Rajoy tweeted he would try to “form a stable government in the general interest of all Spaniards”.
Mr Rajoy is launching what are expected to be complicated talks with Socialist Party leader Pedro Sanchez, after his party won the most votes in national elections but fell short of a parliamentary majority. Ciudadanos has already said it will abstain, but Mr Sanchez ruled that out for his Socialists.
For decades the Socialists and PP have alternated in the seat of government but the rise of two new parties, the left-wing “Podemos” (We Can) and liberal “Ciudadanos” (Citizens), has left Spanish politics fragmented.
Under Spanish law, the new parliament must reconvene by January 13.
The Spanish Socialists, who last held power from 2004 to 2011, have kept silent about what they would do if Rajoy fails to form a new government.
Political analyst Nacho Martin Blanco said he believed the Socialists would “end up allowing the Popular Party to govern to avoid fresh elections which would see the Popular Party boost its score as it would recoup votes lost to Ciudadanos and to those who abstained”.
If no congressional consensus is reached on a new prime minister, Spain could face new elections in early 2016.
Sources briefed on the meeting between Rajoy and Sanchez said the two did not discuss a pact in detail as the latter made clear at the start that he would not back the PP and that his party would instead seek backing from other groups to form a majority.
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He said they would exclude Podemos, “which wants to break Spain up”.
