I have had to insert this page into this web site to alert pet owners here in Spain about this pretty looking caterpillar. My reason is following our beautiful Millie nearly dieing as a result of this dangerous little beast. Fortunately she has made a complete recovery but it was touch and go and very distressing for her and all of us for many weeks. The lasting affect is that she has basically lost half of her tongue, She manages just fine now - but she really could have died, and we were all totally unaware of this danger which happened in our own back garden. They can be anywhere, even in the street, whereever there is a Pine Tree - so keep your eyes open around the March April time when they hatch. Please read the article below and pass it on to everyone you can - Thanks!

Pine Caterpillars (Latin name thaumetopoea pityocampa) are probably one of the most unpleasant creatures you will find in Spain, certainly in areas where pine trees grow in abundance. They are found throughout the warmer regions of Southern Europe, the Near East and North Africa. As well as causing much damage to pine forests, they are a major danger to animals and, to a lesser degree, human beings.

Do not touch them. Warn your children that they are not like the friendly English caterpillars. The very fine hairs on these creatures are poisonous and most dangerous. They can be seen living in silk cocoon style nests hanging in the pine trees to which they are most harmful, stripping them of their pine needles. When hungry, they leave their cocoon to seek another uninfested tree on which to feed. They travel nose to tail in a line, hence the name Processional. They are most noticeable from January to mid April depending on the increase in temerature.

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If they drop onto you or your pet, don't brush them off with your hands because the effect is most unpleasant, causing great irritation, rash and pain. Dogs, cats and people can suffer from shock. The hairs of the caterpillars are still virulent even when the creatures are dead. Do not hit them with sticks because hairs flying in the air are just as dangerous. Burn them, but be careful of floating hairs. If the caterpillars are in the tree cocoon state, first spray the nest with hair spray (to seal down the hairs), cover the cocoon and the affected part of the branch with a plastic bag, cut down the branch, place it on clear ground and burn it.

If the caterpillars are on the ground marching, it is better first to spray them with lighter fuel and then set them alight. This reduces the risk of flying hairs.
Take care to only do this where you cannot inadvertently start a forest fire because during the summer months the undergrowth and trees are very dry.

If you live near pine trees, it is recommended that you keep Anti Histamine tablets handy as an early treatment. In particular, avoid ingesting the hairs. Dogs are most at risk by sniffing the ground where the caterpillars have marched.

Take particular care with your eyes. If affected the result is serious, causing pain and swelling similar to a bad case of conjunctivitis.

Millie first showed signs of distress, crying, and we thought poison, she was salivating terribly  -  By the time we got her to the Vets her tongue had turned black and swelled up to twice its size, her breathing was eratic and she was almost unconscious - the Vet  knew immediately what it was - thank God! and began a course of treatment that included daily injections that we had to administer at home

Treatment: If a person or animal shows signs of shock, get them to a doctor, hospital or vet immediately.

If you have children and pets, and are considering buying property, take the above details into consideration. Look for the large Pine trees in the garden or close by.

Golfing. When these caterpillars march across golf courses, play ceases immediately because it is too hazardous to try to clear them away.

1. Mechanical means: cut & burn branch tip with nest. first spray the nest with hair spray (to seal down the hairs), cover the cocoon and the affected part of the branch with a plastic bag, cut down the branch, place it on clear ground and burn it. 
2. Spraying with bacillus thuringiensis (BT): the Caterpillars ingest the BT during eating the needles, which affects their ability to digest food, and over a few days they will starve to death.

http://web.cortland.edu/fitzgerald/PineProcessionary.html

http://www.motorhomefacts.com/ftopic-3825.html

http://www.spanishgardener.com/forum/viewtopic.php?t=41