By Inmaculada Sanz and Tracy Rucinski

MADRID, Sept 29 (Reuters) - Spain's first general strike ineight years, called to oppose spending cuts, disrupted transportand factories on Wednesday, a day before the government was dueto take its tough budget to lawmakers.

The strike won more support from workers than a weak publicsector walk-out in June, but impact was limited as mostSpaniards appear to resign themselves to austerity to trim amassive deficit.

"The country is in a mess, and everyone's personal financestoo, so I think a strike just makes things worse," said35-year-old shop assistant Arancha Fernandez de Cordoba, whowent to work.

Wednesday's work stoppage -- called by Spain's two bigunions the UGT and CCOO -- coincided with labour action inBrussels, Athens and other European cities as austerity measuresbite across the continent.

Socialist Prime Minister Jose Luis Rodriguez Zapatero, dueto start seeking parliament's approval for his 2011 budget planon Thursday, has vowed not to go back on austerity and labourreforms that make it easier for companies to hire and fire.

Trade unions said 10 million people, or more than half theworkforce, had walked out, but the government said less than 10percent of public administration workers and 21 percent ofMadrid transport workers were on strike.

Labour Minister Celestino Corbacho said strike action hadbeen higher in car manufacturing and ports and lower in healthand education.

"The strike has had an uneven following and a moderateimpact," he told journalists at a news conference.

Thousands of workers marched and waved flags in mostlypeaceful protests around the country. Police detained a fewpickets in Madrid for blocking roads, protesters set a patrolcar on fire in Barcelona and miners burned tyres in Asturias.

"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, a picket.

Demand for power was 16.5 percent lower than usual asassembly lines halted at factories, and tourists trapped bycancelled flights napped on inflatable mattresses in Mallorca.

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

"The Spanish protest doesn't seem to be large enough toreally change anyone's view, either in the market or amongst theSpanish people," said David Lea, Western Europe analyst atControlRisks.


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

Unions were also protesting Zapatero's pledge to reformpensions and raise retirement age to 67 from 65.

Spain's trade unions represent about 16 percent of workers,a low level compared with much of Europe. Non-union workerscriticised the strike.

"The strike is a big act, it's just a way for the unionrepresentatives to justify their salaries," said beauty parlourworker Teresa, 38, as she peeled strike posters off the door ofher salon.

Many businesses remained open but many bus, subway and trainservices were cancelled.

The yield premium investors demand to hold Spanish 10-yearbonds rather than benchmark German bunds rose to around 197basis points, its widest since July, largely due to fears ofpossible rating downgrades in peripheral euro zone states.

The benchmark Ibex index of Spanish stocks closed down 0.98percent at 103.9 points. (Additional reporting by Tomas Gonzalez, Jose Rodriguez,Feliciano Tisera, Elisabeth O'Leary and Peter Apps; writing byMartin Roberts; editing by Andrew Roche)