Car blast targets royal parade in Madrid

A car bomb exploded in central Madrid late on Friday, hours after the Basque separatist group ETA threatened to attack a military parade attended by King Juan Carlos.

Dozens of vehicles were damaged and 17 people slightly injured by the explosion in an underground car park. ETA had warned on Friday morning that a car bomb would explode during the annual procession marking the Dia de la Hispanidad, a Spanish holiday that commemorates Columbus's arrival in America and honours the Virgen del Pilar, one of Spain's patron saints. But a police search found nothing. At the time of the warning, King Juan Carlos, the Prime Minister, Jose Maria Aznar, and other political leaders were sitting in a grandstand erected in the Plaza de Colon to watch the parade.

The bomb blew a hole through one of the floors of the car park in the Plaza de Colon, sending the car plunging to the level below and damaging around 70 vehicles. One floor of the car park operates as a pound for illegally parked cars: the vehicle thought to have carried the explosives, a stolen Ford Fiesta, was towed there on Friday evening after it was found parked on a zebra crossing. The Plaza de Colon is at the heart of the Spanish capital, which was busy as usual on a Friday night.

People attending a theatre next to the car park said they were shaken by the blast during the second half of a play. "We heard the explosion and the building shook but we thought it was part of the show because the actors kept acting," said Fernando Garcia Molina, an economist. "They kept going until the lights came on and we were all asked to leave calmly."

Pio Garcia Escudero, a senior official of the ruling Popular Party, was in no doubt that ETA was to blame. He said the explosion appeared to be the group's response to an agreement reached this week by Spain and France to crack down on the group with speedier extraditions and other measures. ETA, he said yesterday, "is increasingly isolated in the face of social pressure" against the group and in favour of peace.

The terrorist group – the initials stand for Euzkadi Ta Askatasuna or Basque Fatherland and Liberty – has claimed 35 killings since it ended a ceasefire in December 1999, but has been relatively inactive in recent months.

The bomb may also be a response to the arrest of a man believed to be an ETA leader in France earlier this month. ETA's last killings – of a town councillor and a policeman – were on 14 July. However, the group has been blamed for several explosions, including a car bombing on 1 October in the Basque regional capital of Vitoria.

Spanish and French government officials agreed to increase co-operation in the fight against ETA at a summit on Thursday. ETA has been linked to about 800 deaths since its first murder of a Spanish policeman in 1968.