EUROPE MARKETS: European Stocks Pause For Breath After 8-day Winning Run

By Sara Sjolin, MarketWatch Features Dow Jones Newswires

Pound slides after disappointing construction data

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European stock markets traded in tight ranges on Tuesday, taking a breather after an eight-day winning streak, as investors absorbed developments in Catalonia after the weekend's chaotic independence vote.

The Stoxx Europe 600 index was marginally higher at 390.22, trading around its highest level since mid-June.

On Monday, the pan-European index rose 0.5% (http://www.marketwatch.com/story/european-stocks-rise-for-8th-straight-session-as-euro-slides-after-violent-catalonia-vote-2017-10-02), boosted by a weaker euro , after the Catalan referendum descended into violent clashes (http://www.marketwatch.com/story/chaos-clashes-and-hundreds-of-reported-injuries-as-catalans-go-to-the-polls-in-vote-that-could-split-spain-2017-10-01) between voters and police. Catalan leaders have said they are considering making a declaration of independence (http://www.marketwatch.com/story/catalonia-leader-with-90-approval-we-have-the-right-to-be-independent-2017-10-01) this week, given around 90% of the voters in Sunday's ballot supported a split from Spain.

But Spain's central government has declared the vote illegal, and Justice Minister Rafael Catalá has warned that Madrid will do "everything possible" to prevent a secession.

A general strike was in effect in Catalonia on Tuesday to condemn police violence, with schools and public transport shut for most of the day.

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Read:EU headed for new crisis? Analysts fear political turmoil after violent Catalonia vote (http://www.marketwatch.com/story/eu-headed-for-new-crisis-analysts-fear-political-turmoil-after-violent-catalonia-vote-2017-10-02)

The euro on Tuesday was largely flat against the dollar, fetching $1.1737 compared with $1.1734 late Monday in New York.

"The political risks have been gradually increasing in the past two weeks; it started with the German Federal Election, which led to the surge of the far-right, and now Catalonia's independence vote," said Hussein Sayed, chief market strategist at FXTM, in a note.

"Politics has clearly overshadowed the economic improvement in the eurozone, and this will likely remain the case for the rest of the week," he added.

Spanish banks, which were among biggest decliners on Monday, rebounded on Tuesday. Shares of CaixaBank SA (CABK.MC) added 1.2%, Banco Santander SA (SAN) (SAN) gained 0.4%, and Bankia SA (BKIA.MC) put on 1.1%.

Read:Brave investors might want to buy the dip on these 2 Catalonia-based banks (http://www.marketwatch.com/story/brave-investors-might-want-to-buy-the-dip-on-these-2-catalonia-based-banks-2017-10-02)

Spain's IBEX 35 index was down 0.1% at 10,242.50 on Tuesday, building on a 1.2% loss from Monday.

Other indexes: France's CAC 40 index rose 0.2% to 5,358.52, while the U.K.'s FTSE 100 index was marginally lower at 7,438.21.

German stock markets were closed for trade in observance of German Unity Day. The DAX 30 on Monday scored a record closing high (http://www.marketwatch.com/story/germanys-dax-30-index-closes-at-record-high-as-euro-stumbles-2017-10-02).

Economic updates: The U.K.'s construction sector unexpectedly contracted in September, with the construction purchasing managers index falling to 48.1 from 51.1 in August. It's the first time the index has fallen below the crucial 50 threshold that separates contraction from growth in 13 months, according to publisher of the report IHS/Markit.

"A shortfall of new work to replace completed projects has started to weigh heavily on the U.K. construction sector. Aside from the soft patch linked to spending delays around the EU referendum, construction companies have now experienced their longest period of falling workloads since early-2013," said Tim Moore, associate director at IHS Markit, in the release.

The pound slipped after the report, to buy $1.3252 compared with $1.3277 on Monday.

See:Traders have rediscovered their taste for sterling, CFTC data shows (http://www.marketwatch.com/story/traders-rediscover-their-taste-for-sterling-cftc-data-shows-2017-10-02)

Producer prices in the eurozone rose 0.3% in August, compared with stable prices in July. Consensus estimates called for a 0.1% reading, according to FactSet.

Stock movers: Shares of Ferguson PLC (FERG.LN) rose 3.5%. The distributor of plumbing and heating products, formerly known as Wolseley, said it is initiating a GBP500 million share-buyback program, after profit jumped (http://www.marketwatch.com/story/ferguson-profit-up-declares-500-mln-buyback-2017-10-03) in the fiscal year to July 31.

On a downbeat note, shares of Coca-Cola HBC AG fell 2.7% after the bottler said its Chief Executive Dimitris Lois has passed away (http://www.marketwatch.com/story/coca-cola-hbc-ceo-dimitris-lois-has-died-2017-10-03).

(END) Dow Jones Newswires

October 03, 2017 06:22 ET (10:22 GMT)