The nomination by eurozone finance ministers of Jose Manuel Gonzalez-Paramo for the vacant position at the European Central Bank set tongues wagging over whether Spain's hopes of getting the IMF job were now dead.

By tradition, the managing director of the IMF is a European while the top job at the World Bank, the IMF's sister institution, goes to an American.

Spain's outgoing economy minister, Rodrigo Rato, had emerged as an early front-runner to succeed Horst Koehler, who resigned as the IMF chief on March 4 to run for president in his native Germany.

But the Spaniard's chances were seen to have been dented after his conservative government suffered a shock election defeat three days after the March 11 attacks in Madrid.

And Rato's hopes may have been set back further by Gonzalez-Paramo's nomination to succeed his compatriot, Eugenio Domingo Solans, as one of the six executives responsible for the day-to-day running of ECB monetary policy.

The rest of the EU may balk at appointing two Spaniards in a short period to two major jobs in international finance. Finance ministers are due to decide on a candidate for the IMF job at an informal get-together in Ireland next week.

Jean Lemierre, a Frenchman who heads the European Bank for Reconstruction and Development, may now be pulling ahead in the IMF race, European sources said.

The EU's decision on the ECB seat "paves the way for Lemierre to take the IMF job", one diplomat said.

Italian Prime Minister Silvio Berlusconi meanwhile muddied the waters by saying he had his own "exceptional" candidate for the IMF. But he declined to say who.

One Italian name rumoured is that of Mario Draghi, formerly a top economic adviser to the government and now a vice chairman of US investment bank Goldman Sachs. Draghi is said to be highly respected in Washington.

Spain's newly elected Socialist government is still backing Rato for the IMF, and the minister was himself upbeat about his chances.

Speaking as European Union leaders opened a two-day meeting, he said his nomination would be "a great appointment for me and for Spain".

But he acknowledged: "It is going to be a complicated negotiation."

Gonzalez-Paramo beat off strong competition for the ECB job from Belgian National Bank director Peter Praet, who was widely seen as the better qualified candidate.

Irish Finance Minister Charlie McCreevy said the decision to submit the Spaniard's name for rubber-stamping by the EU leaders was taken "unanimously" by the 12-nation eurogroup.

But other ministers said Gonzalez-Paramo only emerged on top after the eurozone's four biggest countries -- Germany, France, Italy and Spain -- united to gang up on their partners.

"I had the impression that the big member states were trading like in a marketplace. There was a stitch-up in the air," said Luxembourg Prime Minister Jean-Claude Juncker.

Asked about the fall-out on the IMF decision, Juncker said: "The candidacy of Mr Rato would be welcome, but we'll have to evaluate what happened tonight and look at any other names that come forward."

In time-honoured EU tradition, there is dark talk of favours being traded.

Sources suggest that Germany is backing Lemierre for the IMF post in return for French support for a German to be given a new job of "super commissioner" responsible for the EU's economic, industrial and trade policy.

If it gets its way, Germany would overlook the fact that a Frenchman, Jean-Claude Trichet, already leads the ECB.