Mercerías are the type of stores in Spain that sell knitting yarns,hilos de tejer; and knitting needles, agujas de tejer, as well as a host of sewing notions, usually you won't find fabrics there. I purchased some Katia yarn ( www.katia.es
) at a store near the Puerta del Sol. Katia Yarns are fantastic and costly over here.
I did see knitting needles there as well, some English, French and American needles. Lovely wood knitting needles from Barcelona. I did not see many of our specialty needles like our circular needles.
Arenal 1(Puerta del Sol)
Tf. 91 522 99 67
Almacenes Cobián, S.A.
Calle y Plaza de Pontejos, 2
Telephone: 91 53128 42
And if you do not have time to visit these places, you can also buy them at the ever present Corte Inglés. They sell everything! Good luck.