EUROPE MARKETS: Spain Stocks Rally As Investors Absorb Catalonia Developments

By Sara Sjolin, MarketWatchFeaturesDow Jones Newswires

Prime Minister Mariano Rajoy makes first comments about crisis

European stocks traded mixed on Thursday as investors continued to monitor political developments in Spain where the rift between Madrid and separatists in Catalonia deepened.

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The Stoxx Europe 600 index was flat at 390.35, weighed by losses for drugmakers.

Spain's IBEX 35 index rallied 2.4% to 10,200.60, after posting its biggest loss in 15 months on Wednesday. Spanish assets have been battered in recent days after scenes of violence from Sunday's independence referendum in Catalonia went global and Madrid declared the vote illegal.

The standoff between the central government and the secessionists deepened on Wednesday after separatist parties set out a course to declare independence on Monday (, requesting the regional parliament meet that day to discuss the referendum result. About 90% voted for independence, but less than 50% of the Catalan people participated in the referendum.

Catalan President Carles Puigdemont in a televised address on Wednesday night said he's open to a mediation process (, but that the government has rejected this. He also accused King Felipe VI of acting as a mouthpiece for Madrid, saying the king's speech on Tuesday had "disappointed many in Catalonia, who appreciate you...[and] expected another tone from you, a plea for dialogue and harmony."

On Thursday, Spanish Prime Minister Mariano Rajoy told Spanish news agency EFE that he has asked Puigdemont to not go ahead with plans to declare independence next week, to avoid "greater evils," according to an Associated Press report ( Spain's constitutional court has ordered that a special session of Catalonia's parliament planned for next week to be suspended temporarily, AP reported.

Other indexes: Germany's DAX 30 index was down 0.2% at 12,950.85, after scoring a record on Wednesday.

France's CAC 40 index was 0.2% higher at 5,374.20, while the U.K.'s FTSE 100 added 0.4% to 7,493.80.

The euro fell to $1.1729, from $1.1761 late Wednesday in New York, as the dollar strengthened across the board.

The European Central Bank released the minutes of its latest meeting on Thursday. The minutes showed ( officials discussed how to trim their large bond-buying program at the September policy meeting, and argued over why euro has been so strong.

"There is still no indication of how the taper will occur--most notably whether it will be announced in full or one step at a time," said Jennifer McKeown, chief European economist at Capital Economics, in a note.

Stock movers: Among the heaviest-weighed stocks, Novo Nordisk AS (NOVO-B.KO) fell 0.6% and Novartis AG (NOVN.EB) fell 0.8%. Roche Holding Ltd. (ROG.EB) slid 1%.

Another heavyweight, Assa Abloy AB (ASSA-B.SK) slid around 5%, after media reports that the lockmaker's chief executive officer Johan Molin could be leaving next year, possibly becoming the next chairman of Ericsson SE. That news boosted the telecoms-equipment group (ERIC) (ERIC) by nearly 2%. Molin told Reuters ( that he hadn't been asked to lead Ericsson, but didn't dismiss the idea.

Some beaten-down Spanish stocks were on the rise, with Banco Santander SA (SAN)(SAN) up 2%, Telfonica SA (TEF) (TEF) up close to 2%. Utility group Iberdrola SA (IBE.MC) jumped 3%.

Meanwhile, Banco Sabadell SA (SAB.MC) shot up nearly 5%. The lender said it may move its headquarters out of Catalonia ( after a decline in share prices amid the crisis over independence in the region. The bank is currently based in Barcelona.

-- Barbara Kollmeyer contributed to this article.

(END) Dow Jones Newswires

October 05, 2017 10:38 ET (14:38 GMT)