(MADRID) - European socialist leaders meeting in Spain on Tuesday predicted electoral gains in the wake of the global financial crisis which has revealed the "failure" of the policies of their rivals on the right.

"Conservatives have perhaps a policy for sunny days but now it is rainy and cold. This crisis is an opportunity for social democrats," the leader of Sweden's opposition Social Democrats, Mona Sahlin, told the Madrid gathering, which wound up on Tuesday.

Many of the slogans at the two-day meeting of the Party of European Socialists (PES), that groups socialists and social democratic parties in the European Parliament, mirrored those of the campaign of US President-elect Barack Obama, which successfully tapped into voter concerns over the economy.

"The time is changing now," said former Danish prime minister and the current PES president, Poul Nyrup Rasmussen while others repeated Obama's core slogan: "Yes, we can!".

The global financial crisis has led to an abrupt economic slowdown across Europe and rising unemployment.

It comes as right-wing parties are in government in three major European economies -- Germany, Italy and France -- and have the most seats of any political grouping in the 785-seat European Parliament.

Spanish Prime Minister Jose Luis Rodriguez Zapatero, one of the few European socialist party leaders to remain in power in recent years, predicted left-wing formations would make gains in next year's European Parliament elections.

"In June we will have a majority," he said.

The leaders of the parties adopted on Monday a PES "manifesto" for the elections called "People first: A new direction for Europe" which calls for financial markets to be reformed "to serve the real economy, jobs and growth."

"Conservatives have pursued a policy of blind faith in the market -- serving the interests of the few rather than the general public -- and we are now seeing the damage that badly regulated markets can do," the manifesto reads.

The new leader of France's opposition Socialist Party, former labour minister Martine Aubry, called for the establishment of a "new economic model".

"Communism died 20 years ago, liberalism two months ago," she said. "Liberal global governance and financial liberalism have suffered a social, moral and economic failure."

Aubry has vowed to keep the party "solidly anchored on the left", arguing that a shift to the centre would alienate traditional voters at a time when the financial crisis has revived leftist state-driven economics.

"This is the failure of capitalism which forgot the social element," said the chairman of Germany's Social Democratic Party, referring to the global financial crisis.

Portuguese Prime Minister Jose Socrates, whose Socialist Party is seeking to be re-elected to a second term in a general election next year, was more restrained in his criticism of capitalism.

"We must do our best to recover from this situation: to stabilise the financial system, to resist the populist and demagogic," he told the gathering, adding spending on public works should be increased.

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