By Inmaculada Sanz and Tracy Rucinski

MADRID, Sept 29 (Reuters) - Spain's first general strike ineight years to protest government spending cuts aimed atslashing the budget deficit had limited impact on Wednesdaybeyond disrupting transport and some factories.

Socialist Prime Minister Jose Luis Rodriguez Zapatero, dueto unveil his 2011 budget plan in parliament on Thursday, hasvowed to maintain deep austerity measures and labour reformsthat make it easier for companies to hire and fire.

Trade unions said 10 million people, or more than half theworkforce, were on strike. Government officials gave no numbersbut played down disruption.

Financial markets shrugged off the strike, which analystssaid was unlikely to make the government reverse its plans tomeet European Union deficit reduction targets.

Hundreds of marchers waved flags, blocked streets and forcedsome shops to shut in the heart of Madrid. Union leaders said 30protesters were detained but most were quickly released.

In northern Spain, car factory assembly lines halted. Fewbuses were running in Madrid and only half of undergroundtrains, although Labour Minister Celestino Corbacho said aminimum guaranteed service agreed with unions was being met.

"We'll continue to strike if that's what's needed to bringdown the labour reform, which threatens to make jobs even morevulnerable," said graphic designer Alfredo Perez, one of thepickets.

The two biggest unions, the CCOO and UGT, called the strikeover austerity, labour reform and Zapatero's plans to overhaulstate pensions and raise the retirement age to 67 from 65.

The strike in Spain coincided with union action in Brussels,Athens and other European cities as austerity measures biteacross the continent.

MANY INSIST ON WORKING

Many Spaniards braved transport hassles to go to work,citing the country's high unemployment rate -- 20 percent.

"The country is in a mess, and everyone's personal financestoo, so I think a strike just makes things worse and is not thebest way to move on," said 35-year-old shop assistant AranchaFernandez de Cordoba.

Spain's economy is emerging sluggishly from a deep recessionand the unions are much weaker than they were 20 years ago,representing about 16 percent of workers.

"The strike is a big act, it's just a way for the unionrepresentatives to justify their salaries... The unions haven'tdefended workers' rights before, so I'm not in agreement withthe strike now," said beauty parlour worker Teresa, 38, as shepeeled strike posters off the door of her salon.

Zapatero cut civil servants' wages by 5 percent as part ofan austerity package after investors punished Spanish borrowingcosts earlier this year over fears the country could be headingfor a debt crisis that would trigger a Greek-style bailout.

Madrid produce markets were working normally, althoughstallholders said they had to stock up before the capital'swholesale market ground to a halt as the strike began atmidnight.

Schools and hospitals were largely unaffected.

However, in a sign of low industrial activity, electricitydemand was about 20 percent less than expected, according todata from grid operator REE.

The benchmark Ibex index of Spanish stocks was down 0.8percent at 0945 GMT, reversing initial gains, while the widerpan-European FTSEurofirst 300 index was down 0.2 percent.

The spread between Spanish 10-year bonds and German bunds --a key measure of Spain's borrowing costs -- was around 198 basispoints, ticking up from a day earlier when it hit its widestpoint since July.

(Additional reporting by Tomas Gonzalez, Nigel Davies, PaulHanna and Elisabeth O'Leary; writing by Martin Roberts; editingby Fiona Ortiz and Paul Taylor)