Those acquitted included Syrian-born Imad Eddin Barakat Yarkas, known as Abu Dahdah, who is serving a 12-year sentence on the separate charge of having headed an al Qaeda cell in Spain.

Abu Dahdah was initially handed 15 more years for helping to prepare the attacks of September 11, 2001, in the United States, but the Supreme Court found that there was not enough evidence to support that charge.

With regard to the financing charge, there was "not the least indication" that Abu Dahdah and the two others had sent funds to al Qaeda, the National Court said.

Court decisions acquitting Islamist suspects or handing down milder sentences are not unusual in Spain, raising questions over whether police exaggerate the threat or whether courts are allowing dangerous extremists to go free.

Spain has feared a new Islamist bloodbath since March 11, 2004, when the country had its own September 11.

Radicals linked to a Moroccan extremist group planted bombs on four Madrid commuter trains, killing 191 people and injuring about 1,800 others.

Police have detained more than 350 Islamist suspects over the past four years, apparently foiling attacks against targets including the anti-terrorism National Court and the Barcelona transport network.

Spain an alleged specific target for al Qaeda

Al Qaeda propaganda includes calls to reconquer Spain from Christians who expelled its Moorish rulers half a millennium ago, and to take the Spanish enclaves of Ceuta and Melilla on the Moroccan coast.

Spain has become one of the European countries where extremists recruit most volunteers to carry out suicide attacks in Iraq.

More than 100 young men, most of them North African immigrants, have travelled from Spain to Iraq since the US invasion of the country in 2003, police sources told the daily El Pais.

Most of the volunteers used a route leading through Syria. Some died in suicide bombings in Iraq, while others were unable to get there and returned to Spain, where they encourage others to follow their example, according to the daily.

Almost 50 percent of suspects released in 2007

Despite such evidence of the presence of potential terrorists in Spain, Spanish courts acquitted 31 of the 63 people who were tried on charges linked to Islamist terrorism in 2007.

The Supreme Court has overturned several such high-profile verdicts handed out by the National Court in the recent years.

It reduced the sentence of Abu Dahdah from 27 to 12 years, acquitted three others among a total of 18 whom the National Court had convicted in the case, and acquitted four of the 21 people who had been sentenced for the Madrid train bombings.

The Supreme Court also acquitted 15 of the 20 people who had been sentenced for belonging to an extremist cell and planning attacks including a plot to blow up the National Court.

That acquittal, in October 2008, caused concern among police who regarded the suspects as very dangerous.

Questions over exaggerated threat

With media attention focusing on Islamist terrorists rather than the overwhelming majority of peaceful Muslims living in Spain, the acquittals raise the question whether the threat is being exaggerated, but the public prosecutor's office does not believe that to be the case.

The acquittals were demonstrative of the "enormous legal difficulties" of proving that a suspect was dangerous, the prosecutors said in a 2008 report.

Potential terrorists usually belong to small cells which act independently, making obtaining proof even harder, according to police experts.

There have been no significant Islamist attacks in Spain since the Madrid train bombings, the prosecutors conceded, but warned that the difficulty of jailing suspects hampered preventative action by police.