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BILBAO, Spain, May 24 (Reuters) - A homemade bomb was found under the car of a candidate for Spain's ruling Socialist Party in the country's Basque region on Thursday, three days before regional elections, police said.

Smoke was seen coming from the device under the car of Jose Antonio Elola in the town of Zarautz but it failed to ignite and caused no damage, police said.

The device may have been the kind of camping gas bottle often used in street violence in the Basque region, where nationalist groups want independence from the rest of Spain, they said.

The attack on Elola raises tensions around the vote on May 27 after hundreds of Basque nationalists were banned from taking part in the elections due to their alleged links to an outlawed separatist party.

Elola is standing for the Socialists in the town of Guetaria and is the brother of a Socialist councillor in Zarautz.

Spain's Supreme Court banned Basque nationalists from standing in the elections earlier because of links to Batasuna, outlawed since 2002 for links to separatist guerrillas ETA.

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