Elections in Spain are seen as a test for the government over its budget cuts, bank rescue and plans to seek a credit line from the eurozone bailout fund.
Rajoy's conservative People's Party (PP) took an unexpectedly strong victory in Galicia, a north-western region of 2.8 million residents, where it enlarged its absolute majority in the regional parliament.
The Galician elections were seen as a test for the government over its budget cuts, bank rescue and plans to seek a credit line from the eurozone's new bailout fund.
Rajoy has faced widespread protests against such policies, deemed ineffective against a deepening recession and a 25-per-cent unemployment rate as he seeks to trim the budget deficit from 9.4 per cent of gross domestic product in 2011 to 6.3 per cent this year.
But in Galicia, which the PP has governed since 2009, similar policies have proved more effective.
'Galicia will be the first (region) to exit the (economic) crisis,' regional premier Alberto Nunez Feijoo promised during the electoral campaign.
Galicia boasts one of the lowest budget deficits among Spain's debt-ridden 17 semi-autonomous regions, even if budget cuts have undermined its social services and unemployment has risen to 21 per cent.
Galician voters had thanked the PP for its 'serious' economic policy, PP Secretary-General Dolores de Cospedal said.
But the Galician election result was seen by many analysts as a personal triumph of Nunez Feijoo, which could not be extended to Rajoy's government as well.
Indeed, Nunez Feijoo had called early elections to prevent the government's growing unpopularity from influencing the result, and avoided making joint appearances with Rajoy during the electoral campaign.
In the nearby Basque region, the elections where the first free from the threat of violence by the separatist group ETA, which had ended its 43-year armed campaign a year earlier.
The Basque Nationalist Party (PNV), which has ruled the region for 26 of the past 32 years, put an end to a brief period of Socialist rule.
PNV leader Inigo Urkullu has been ambivalent on the subject of Basque independence, but there is concern in Madrid that the party could resuscitate the so-called Ibarretxe Plan, named after 1999-2009 Basque premier Juan Jose Ibarretxe.
PNV member Ibarretxe tried to stage a referendum on the Basques' 'right to choose' their future. The plan was blocked by the Spanish parliament and by the Constitutional Court.
The big winner of the Basque elections was EH Bildu, an openly separatist party growing out of the entourage of ETA, which consolidated its position as the region's second political force.
For the Basques, 'it is time to start thinking as a country' and to 'stop the orders coming from Madrid,' said Laura Mintegi, EH Bildu candidate for regional prime minister.
The party's result was the best ever for separatists associated with ETA, setting off alarm bells at the PP headquarters in Madrid.
