Firemen were kept busy putting out small fires throughout the district of Atocha in Madrid, after a huge rally opposing severe austerity measures descended into violent clashes between demonstrators and police on Wednesday.

Thousands of people have been on a general strike throughout Spain, protesting against the government's decision to raise taxes and cut spending, pensions and benefits in an attempt to avoid the need for a full-blown international bailout.

Demonstrators had set fire to wheeled rubbish bins and other debris on many of the city's roads.

Some had engaged in sit-down protests, which police tried to forcibly break it up, dragging away those who resisted.

Earlier in the night, riot police charged at demonstrators and used their batons, tear gas canisters could be seen smouldering on the street and rubber bullets were fired.

In response, some demonstrators threw flares and other objects at the police; others continued their protests peacefully.

Paramedics were on the scene treating injured people, including at least one journalist who had injuries to his face.

To combat a three-year financial crisis over high sovereign debt, governments across Europe have been forced to tighten their fiscal belt, as a prolonged recession grips the Eurozone.

In Spain, the unemployment rate is now above 25 percent and at 50 percent for the under-25s.

Demonstrations have taken place throughout Europe, with the largest occurring in financially suffering areas of Southern Europe such as Italy and Portugal.

Spain's General Workers' Union said the nationwide strike, the second this year, was being observed by nearly all workers in the automobile, energy, shipbuilding and construction industries.

Most schools were shut down, and hospitals operated with skeleton staff.

In the late afternoon, tens of thousands filled the downtown streets of Madrid, Barcelona, Valencia and other cities, though officials and organisers gave differing turnout figures.

The Spanish Interior Ministry said there were 35-thousand demonstrators in central Madrid, but unions said there were 350-thousand.

By early evening, 118 people had been arrested throughout Spain and 74 people, including 43 police, injured.