EUROPE MARKETS: Spanish Stocks Stage A Comeback, Helping Europe Drive Higher

By Carla Mozee, MarketWatch Features Dow Jones Newswires

German industrial output beats forecasts

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European stocks nudged higher Monday, finding upside support from advances in Spanish stocks and strength in German economic data.

The Stoxx Europe 600 index rose 0.2% to 390.05, but pared the gain as industrial, oil and gas and financial shares turned lower. Utility and tech shares still logged the best performances. The index on Friday fell 0.4% (http://www.marketwatch.com/story/european-stocks-slip-with-us-jobs-data-in-view-spanish-banks-resume-selloff-2017-10-06) but posted a weekly gain of 0.3%.

Spain's IBEX 35 stood out by rising as much as 1% to 10,306.80, its highest intraday level since Oct. 2, according to FactSet data. The move came after hundreds of thousands of people gathered in Barcelona on Sunday to protest Catalonia's secessionist push (http://www.marketwatch.com/story/hundreds-of-thousands-rally-in-barcelona-to-oppose-catalan-secession-2017-10-08). The demonstration was organized by Catalan Civil Society, an anti-separatist group. The index has since trimmed its rise to 0.7%.

On the index, shares of Banco de Sabadell SA (SAB.MC) rose 1.5% and CaixaBank SA (CABK.MC) picked up 1.9%. The banks last week said they would move their legal headquarters out of the Catalonia region. Catalonia's independence referendum on Oct. 1 was declared illegal by Spanish Prime Minister Mariano Rajoy.

The IBEX 35 last week fell 1.9%.

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"The demonstrations showed us that there are two sides to the Catalan situation," said David Madden, market analyst at CMC Markets UK, in a note.

"The Spanish government has made it easier for companies in Catalonia to relocate their headquarters to a different part of Spain. This form of financial pressure could make life difficult for the Catalans that favor separation for Spain," he said.

"That being said, there is still talk of the region declaring independence this week. Spanish stocks were hit hard by the political uncertainty last week, and global investors will look elsewhere for opportunities while the situation continues."

Spanish bond yields fell on Monday, in another sign investors are getting less worried about the political unrest. The yield on 10-year Spanish government bonds fell 8 basis points to 1.636%, according to Tradeweb.

Data: Trading got under way Monday with figures showing German industrial output grew 2.6% in August (http://www.marketwatch.com/story/german-industrial-output-rises-more-than-seen-2017-10-09), outstripping expectations of a 0.9% increase in a Wall Street Journal poll of economists.

"Strong industrial production data provide further evidence that the economy has left [the] summer lull behind and has returned to maximum speed," said ING Chief Economist Carsten Brzeski in a note.

"While the [German government's] coalition talks have not even started (and are also unlikely to start before Sunday's regional elections in Lower Saxony), the German economy is powering ahead," he said. "In fact, Germany can take comfort from the experience of its Western neighbors which shows that 'only' having a caretaking government for a long while is no obstacle to strong growth."

Other indexes: The Stoxx 600 came off session highs in part as the U.K.'s FTSE 100 fell 0.2% to 7,508.94, pulling back from a two-month high (http://www.marketwatch.com/story/uk-stocks-fall-from-2-month-high-as-pound-regains-strength-2017-10-09).

Germany's DAX 30 index was fractionally higher at 12,959.45, and France's CAC 40 index was flat around 5,359.57.

In the currency market, the euro traded at $1.1745, slightly higher than $1.1732 late Friday in New York.

Stock movers: In Frankfurt, Deutsche Bank AG shares (DBK.XE) (DBK.XE) fell 1.5% following a Wall Street Journal report of a rift at the German lender over its largest shareholder (http://www.marketwatch.com/story/deutsche-bank-shares-drop-following-report-of-rift-over-chinese-shareholder-2017-10-09), Chinese conglomerate HNA Group Co.

K+S AG (SDF.XE) fell 4.6% following plans by the company to integrate its potash and salt units as part of an overhaul.

Accor SA (AC.FR) rose 0.5% after the French hotels group bid about 1.18 billion Australian dollars ($916.6 million) (http://www.marketwatch.com/story/hotel-giant-accor-bids-917-million-for-mantra-2017-10-08) for lodging company Mantra Group Ltd. (MTR.AU)

(END) Dow Jones Newswires

October 09, 2017 06:18 ET (10:18 GMT)