Upbeat growth and unemployment reports from Spain led the country's stocks to rally on Tuesday, but some economists warned that hopes of an imminent recovery remained unrealistic. Spain's benchmark stock index, the IBEX 35, traded nearly 2 percent higher after the Bank of Spain released a report that estimated the economy shrank by only 0.1 percent in the second quarter - its smallest decline since it slid back into recession at the end of 2011. The Bank of Spain's quarterly bulletin is viewed as an accurate indicator of official gross domestic product (GDP) data, which are due on July 30. If the official numbers are in line with this estimate, it will suggest a deceleration in the pace of contraction. Spain's economy shrunk by 0.8 percent in the last quarter of 2012, and by 0.5 percent in the first quarter of 2013.o "If proven correct, this would be a stronger-than-expected GDP figure, more clearly signaling that the worst of the crisis is behind the country… and, in our view, would be consistent with positive growth for the second half of 2013," Antonio Garcia Pascual, chief euro area economist at Barclays Investment Bank, said on Tuesday. Meanwhile, Spain's ABC newspaper reported that official data out on Thursday will show the biggest quarterly fall in unemployment since before the economic crisis. Spain's rate of unemployment was 27.2 percent in the first quarter, and analysts expect it to fall to 26.7 percent in the second quarter. Hopes of an upturn in Spanish corporate activity were also boosted on Tuesday, after the Netherlands' KPN reported that Telefonica was buying its mobile operation E-Plus for 5 billion euros ($6.6 billion). Nonetheless, Ben May, a European economist at Capital Economics, panned hopes that a recovery was on the horizon for Spain. "Given these developments we have revised up our GDP forecasts slightly. We now expect the economy to contract by about 1.7 percent this year, compared to our previous forecast of a 2 percent fall.