Conjunctions
The Spanish conjunctions y ('and') and o ('or') alter their form in both spoken and written language to e and u respectively when followed by an identical vowel sound. Thus, padre e hijo ('father and son'), Fernando e Isabel ('Ferdinand and Isabella'), sujeto u objeto ('subject or object'), vertical u horizontal ('vertical or horizontal').
The change does not take place before the (h)i of a diphthong, as in acero y hierro ('steel and iron'). Nor does the conjunction y change when initial in a question (where it serves to introduce or reintroduce a name as a topic, rather than to link one element with another), as in ¿Y Inés? ('What about Inés?').
When the conjunction o appears between numerals, it is usually spelled with an accent mark (ó), in order to distinguish it from zero (0); thus, 2 ó 3 ('2 or 3') in contrast to 203 ('two-hundred three').
Read more about this topic: Spanish Grammar