After the loss of Teruel in the last month, the March is signed by three outstanding events:

First, the Spanish government proved his military capabilities, if it only would possess sufficient armament, and that it still has the will and strength to resist.

Second, the Italian air raids on Barcelona, in which the vice consul of France died among around thousand civilians, upsets the public opinion in France. Leon Blum, Prime Minister in France again, opens the borders to the Spanish Republic and threatens Franco with an invasion of Catalonia in support of the Spanish government. Chamberlain tries again to stop Leon Blum, but Blum is firm for the moment and Hitler, just after his occupation of Austria, don't want more political trouble than he has already and asks Franco not to provoke France.

The third is Negrins decision, to give way to the Communist demands for power and control. He allies his fate and that of the Spanish republic with the Communist party. The PCE will gain nearly absolute control of the Spanish government, its police and army. This is countered by an growing anti-communism in the army, especially among soldiers and lesser officers. This widespread and growing anti-communism will lead to an statement by the Catalonian government, that the troops on the front should behave properly to assure them the support from the rearguard. A clear threat to cut of supply troops who don't confirm the leading role of the PCE.

The Spanish government tells the journalists of many international news papers: " Teruel showed clearly one thing to the world, that the Spanish government has a efficient army. If it only possesses similar armament to that of our enemies, the whole matter of this rebellion would be a question of weeks, a few months the most." (1)

(1) Fact is, that whenever the government army met the Fascists with somehow equality in armament, it won. This added a lot of frustration to the government, military leaders and soldiers. They knew they could win the war, but they just did not have this incredible amount of new weapons the Fascists rebels were getting in a constant flow. Some historians afterwards, for whatever reasons, tried to proof that Spain got somehow similar armament in mass and quality from the Soviet Union, what is just a blatant lie. The soldiers of the Fascist side confirmed that they possessed plenty of ammunition and got constantly new war material, while the Republican soldiers did not even have enough bullets for their, mostly obsolete, rifles. Especially the air superiority of the Fascists turned out to be decisive. A lesson France did not want to learn from the Spanish civil war and turned out to be fatal in World War 2.

The Baleares, one of the main battleships of the Fascist fleet, is attacked by the Spanish navy while guarding a convoy. The navy battle ship Libertad (both ships had already met before, in September 1937) engage the Baleares, who sinks, hit by an torpedo, in between 3 hours, taking more than 700 crew to death. The rest of the crew is rescued by British and German battle ships from the Non-Intervention Committee

( On 6 March 1938 the Baleares was sunk while on escort duty. The Canarias, astern in the line formation, took command and proceeded with her escort duty, leaving sailors from the unfortunate ship in the water. They were rescued by British destroyers and when Canarias and Cervera returned after the mission to recover the Nationalist sailors, they were met by a Republican air raid that fortunately didn't score any hit.
From http://web.forodigital.es/uphm/mgl/buques/spanishcivwar.htm, this link is also in the link section of La Cucaracha)

Between the 16th, 22:08h, and the 19th, 15:19h, Barcelona suffers 13 massive air strikes by Italian air planes, the bombings are aimed at the civil population, far away from most military objects. The bombs include fire and gas bombs. More than thousand people die, among them the vice consul of France in Barcelona. Also bombed was the historical cathedral of Barcelona

France under Leon Blum was shocked by the air raids over Barcelona and especially about the usage of gas. Leon Blum ordered the partial mobilization of the French army and threatens Franco with an invasion of Catalonia in support of the Spanish government.

Hitler , after the occupation of Austria, is not interested in more international political trouble, and asks Franco to spare Catalonia for the moment. Franco orders to stop advances on Catalonia and to establish a front at the Ebro river (27th of March).

The French ambassador, Labonne, asks Negrin during the meting whether he shares the opinion of his Minister of war, Prieto, that the war is lost. Having just gotten the border reopened, Negrin is in no mood to leave a defeatist in charge of the army.

( Chief of Staff, General Rojo, and Colonel Hidalgo de Cisneros talked of surrendering themselves to Franco, they also shared the opinion of Prieto and wanted to spare many soldiers life on both sides. Prieto thought the action would not soften the fate of the defeated army but insisted in joining them if they decided to go ahead.)