Senior U.S. officials said on Wednesday that the country needs to indefinitely control Venezuela's oil sales and revenues in order to stabilize the country's economy, rebuild its oil sector, and ensure it acts in the interest of the United States.
Developments in Venezuela continue to dominate headlines following the ousting of Nicolás Maduro, although so far most of the market reaction has been seen in commodities.
At the same time, markets are also keeping a close eye on Friday's U.S. employment data, which could clarify the Federal Reserve's outlook on interest rates.
On the previous day, a series of reports painted a mixed picture of the U.S. labor market, which appears to be stuck in a "no hiring, no firing" state.
According to analysts at Bankinter, the drop in the Madrid index—like most European and Asian stock markets, as well as Wall Street at Wednesday's close—represents a preventive pullback under a "wait and see" approach.
"This cooling-off process already began yesterday, as we anticipated. It's more of a waiting phase until things become less confusing, just in case," they said on their Telegram channel.
At 0822 GMT on Thursday, Spain's IBEX 35 benchmark stock index was down 17.70 points, or 0.10%, at 17,578.70 points, while the FTSE Eurofirst 300 index of leading European shares slipped 0.12%.
In the banking sector, Santander lost 0.14%, BBVA edged up 0.03%, Caixabank rose 0.10%, Sabadell gained 0.06%, Bankinter appreciated 0.58%, and Unicaja Banco fell 0.15%.
Among major non-financial stocks, Telefónica dipped 0.03%, Inditex dropped 0.42%, Iberdrola fell 0.39%, Cellnex slid 0.58%, and oil company Repsol lost 0.86%.
(Reporting by Benjamín Mejías Valencia; editing by Paula Villalba)
