MADRID (MarketWatch) -- Recent periods of heavy selling in the Spanish stock market, in the wake of fears that worries over Greece will spread to other European nations, is reportedly being investigated by the country's intelligence service.

The unit of the National Intelligence Center that deals with economic intelligence has spent the last few weeks discussing the matter with Spanish companies and the stock exchange as well as other experts, according to a report in El Pais's English edition on Monday. An official could not be reached for comment.

The newspaper said the investigation is looking at whether there was any collusion in attacks by investors and the hostility shown by some sectors of the U.K. and Spanish press. Over two weeks ago, Spain's IBEX-35 (IBEX) saw its biggest one-day loss since 2008, in the wake of worries over Greece and fears Spain might have similar economic worries. See related story on Spain

The government has been battling a tidal wave of bad news and sentiment from inside and out.

Prime Minister Jose Luis Rodriguez Zapatero has hinted on a number of recent occasions that criticism by the U.S. and British media is part of an effort to undermine the euro. El Pais said in private he has been taken aback by just how aggressive some parts of the foreign press have been with Spain.

Paul Krugman, the Nobel prize winning economist columnist with the New York Times, is practically persona non grata for his comments on Feb. 4 after a blog posting that said Spain was the euro zone's biggest trouble spot. Salgado responded by saying that analysts and media from outside the euro zone did not understand how the bloc worked.

Krugman was at it again on Monday, writing in his column for the New York Times, that Spain's core economic problem is that prices and costs have gotten out of line with those in the rest of Europe and there isn't much that the government can do to make it better, as its economy is locked into the euro.

"This is McCarthy-style witch hunting," said analysts at UBS in a note to investors on Monday, in response to the report in El Pais. "Spain was a victim of joining an inappropriate monetary union and a Ponzi scheme housing market."