The European Union (EU) on Tuesday said it had decided to postpone the EU-Argentina Joint Cooperation Committee scheduled for Friday, following Argentina's decision on Monday to nationalize a part of Spanish oil giant Repsol.

"Last night the Argentinean Government announced that it intends to expropriate the majority stake held by the Spanish company Repsol in the YPF energy company. This announcement is cause for grave concern," EU foreign policy chief Catherine Ashton said while addressing members of the European Parliament.

"As a result of this announcement, we have decided to postpone the EU-Argentina Joint Cooperation Committee which had been scheduled to take place on Friday this week. This matter will also be discussed at next Monday's Foreign Affairs Council meeting in Luxembourg," Ashton said.

The EU's top international representative said the takeover "sends a very negative signal to international investors and it could seriously harm the business environment in Argentina."

She said the Argentina government's intent created "legal insecurity" for all EU and foreign firms in the country.

"I am also alarmed to note that the President (Cristina Fernandez) referred, in her speech, to investments in other sectors such as telecoms and banking," Ashton added.

"This announcement adds to a number of problematic decisions taken by Argentina over the past few years in the areas of import restrictions and investment policy," Ashton said.

She called on the Argentine government to ensure compliance with its international commitments on the treatment and protection of investments originating from the EU.

Ashton said the Spanish government has "our full backing" in this matter, and the EU Delegation in Argentina has conveyed these concerns to the government of Argentina.

She said the European Commission and the European External Action Service were studying the Argentinean draft measure so as to determine the next steps, "all possible options are being analyzed."

Argentina's announcement to expropriate 51 percent of the largest oil company operating in the country, Spanish-owned Repsol YPF, on the grounds that it has been underperforming, sparked a flurry of reactions from Spain.

Spanish Prime Minister Mariano Rajoy postponed his visit to Mexico and Colombia, and held an emergency cabinet meeting to discuss reaction to the move Monday night.

The Spanish government slammed Argentina's decision as "arbitrary", vowing to adopt "clear and firm" measures to defend the interests of Repsol and other Spanish companies abroad.

Repsol is the biggest oil company of Spain and in 1999 it purchased YPF in Argentina, becoming a multinational corporation with a total assets of 27 billion U.S. dollars and 13,500 employees in Argentina alone.

The Argentine authorities accused Repsol YPF of failing to meet commitments linked to oil-drilling in the country, planning to expropriate company's 51 percent shares.