Spanish PM rejects corruption allegations

BERLIN (AP) - Spainish Prime Minister Mariano Rajoy says newspaper allegations of wrongdoing against him are "completely false" and vowed that his government will not let the scandal distract his reform course.

Speaking after meetings with German Chancellor Angela Merkel on Monday, Mr Rajoy rejected allegations that he and other senior members of his party had received under-the-table payments.

He says "we will get through this situation because the statements are absolutely false".

The storm over the allegations has been felt in the markets, with Spain's IBEX stock index falling 3.57 per cent on Monday and the interest rate on its 10-year bonds rising to 5.42 per cent.

Dr Merkel praised the reform course that Mr Rajoy's government has taken and said the scandal would not affect their working relationship as the countries have "a relationship of trust".