Repsol shares continue to slide Tuesday as the Spanish oil company looks set to lose its majority stake in Argentine oil business YPF, after the South American country's president announced she will nationalise it.

Spain has said its "climate of friendship" with Argentina has been destroyed after Argentine president Cristina Fernandez de Kirchner announced the plans for YPF, Argentina's biggest company, in her national address.

Repsol, which owns 58 percent of YPF, said it will be seeking compensation and the Spanish government said its response will be "clear and forceful".

Spain's Industry Minister, Jose Manuel Soria, vowed "there will be consequences that we'll see over the next few days. They will be in the diplomatic field, the industrial field and on energy."

Spain is Argentina's largest EU trading partner, accounting for around 3 percent of its exports. Argentina sold $14.3bn in good to the EU last year, up 28 percent from 2010.

"The rupture of a relationship between Spain and Argentina wouldn't just be a rupture in economic terms," Spanish Foreign Minister Jose Manuel Garcia Margallo said last week. "It would be the rupture of a long-standing fraternal relationship. It would be the worst-case scenario that we can imagine."

Repsol shares were down 6.52 percent in Madrid to €16.34 at 12:12pm local time Tuesday. The company has lost around a third of its value since reports first surfaced in Argentine media in January that the government was actively considering nationalisation. YPF shares leapt by more than 14 percent on 12 April after a similar report in the Clarin daily newspaper that said it had seen a copy of the nationalisation bill sent to Congress.

Repsol said it will fight for at least $10bn (£6.3bn) in compensation.

"These acts will not remain unpunished," Antonio Brufau, Repsol executive chairman, told a press conference Tuesday, adding that Fernandez had "carried out an unlawful act and made unlawful charges after a campaign aimed at knocking down YPF shares and allowing expropriation at a bargain price."

Fernandez was also accused by Brufau of using YPF as "a way of covering up the social and economic crisis Argentina is facing", as it grapples with high energy bills and inflation.

Argentina imports large amounts of costly energy to cope with the country's demand and it has put pressure on YPF to up its output.

By angering Spain, Fernandez's country's biggest foreign investor, which is reportedly seeking allies in this row in order to economically isolate Argentina, Fernandez puts the health of her economy even more at risk.

Argentina's fuel imports surged to $9.4bn last year, the government said. It plans to increase production through YPF in order to establish energy self-sufficiency. It claims the Vaca Muerta formation in southern Argentina holds 23 billion barrels of oil.