UPDATE 1-Spain extremely worried by impact of deadlocked Italy vote
(Adds details, market reaction)
MADRID, Feb 26 (Reuters) - Spain said it was extremely worried about the impact of Italy's deadlocked election result, warning on Tuesday the deadlock could affect the entire euro zone.
Foreign Minister Jose Manuel Garcia-Margallo said there was a feeling of "extreme concern" over possible movements in bond spreads as a reaction to the results.
"This is a jump to nowhere that does not bode well either for Italy or for Europe," Garcia-Margallo told journalists on the sidelines of a conference in Madrid.
The Spanish government said it was monitoring the situation, especially the fallout on financial markets as the premium investors demand to hold Spanish 10-year debt rather than the German benchmark jumped to 393 basis points, a level not seen in several weeks, when it emerged a cabinet could be hard to form.
Spain's blue-chip index Ibex was down 2.87 percent at around 0900 GMT.
Economy Minister Luis de Guindos said Spain had a strong liquidity position and could cope with market jitters after the Spanish Treasury sold close to 11 billion euros ($14.5 billion) of debt last week. ($1 = 0.7567 euros)
(Reporting by Julien Toyer; Editing by Sarah White and Jon Boyle)