Rajoy hosted Socialist Party leader Pedro Sanchez at Spain's presidential palace after Sunday's election gave Rajoy's Popular Party 123 seats in the 350-member lower house of parliament, down from the 186 won in 2011.
The Socialists got 90 seats, followed by the far-left Podemos and allies with 69 and the business-friendly Ciudadanos with 40.
Sanchez said after Sunday's election that it's up to the Popular Party to try to form a government because it got the most votes.
But a Socialist Party spokesman has said the Socialists would not abstain in a parliamentary confidence vote.
Abstention by the Socialists would allow a Rajoy-led minority government because Ciudadanos has already said it would abstain.
In a first parliamentary vote, the candidate must get more than 50 percent of the full 350 votes in order to form a government.
If he falls short, he must get more votes for him than against him in a second ballot 48 hours later. That's a lower bar allowing parties to abstain, letting a rival into power in return for concessions.
If there is still deadlock after two months, King Felipe VI calls a new election.
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