10-5-17 12:58 PM EDT | Email Article

By Sara Sjolin and Barbara Kollmeyer, MarketWatch

Prime Minister Mariano Rajoy makes first comments about crisis

European stocks ended a volatile session mainly higher on Thursday after Madrid suspended a parliamentary session in Catalonia in an attempt to block the region from declaring independence.

The Stoxx Europe 600 index ended 0.2% higher at 391.03, rising for a 10th out of the past 11 session.

Spain's IBEX 35 index rallied 2.5% to 10,214.70, 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 (http://www.marketwatch.com/story/catalonias-secession-from-spain-may-come-as-soon-as-monday-2017-10-04), 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 (http://www.marketwatch.com/story/catalan-president-puigdemont-says-he-remains-open-to-mediation-reports-2017-10-04), 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 (https://apnews.com/582408bff5c948c0ad81bbafd93b9f16?utm_campaign=SocialFlow&utm_source=Twitter&utm_medium=AP). Spain's constitutional court has ordered that a special session of Catalonia's parliament planned for next week to be suspended temporarily, AP reported.

"Only the Parliament of Catalonia can declare independence, and since Madrid has prevented the meeting from taking place there isn't much the separatists can do. Nonetheless, investors will be fearful of the Spanish stock market while the Catalan question hangs over the country," said David Madden, market analyst at CMC Markets UK, in a note.

Other indexes: Germany's DAX 30 index ended marginally lower at 12,968.05, after scoring a record on Wednesday.

France's CAC 40 index rose 0.3% to 5,379.21, while the U.K.'s FTSE 100 added 0.5% to 7,507.99.

The euro fell to $1.1708, 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 (http://www.marketwatch.com/story/ecb-discussed-qe-tapering-options-at-last-meeting-2017-10-05) 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: Assa Abloy AB (ASSA-B.SK) slid 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 2.2%. Molin told Reuters (https://uk.reuters.com/article/uk-assa-abloy-ceo/molins-likely-exit-from-assa-abloy-stirs-speculation-about-move-to-ericsson-idUKKBN1CA0GO) 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 2.9%, Telefonica SA (TEF) (TEF) up 2.9% and utility group Iberdrola SA (IBE.MC) jumping 3.1%.

Meanwhile, Banco Sabadell SA (SAB.MC) shot up 6.2%. The lender said it may move its headquarters out of Catalonia (http://www.marketwatch.com/story/spains-sabadell-mulls-a-move-out-of-catalonia-2017-10-05) after a decline in share prices amid the crisis over independence in the region. The bank is currently based in Barcelona.

 

(END) Dow Jones Newswires

October 05, 2017 12:58 ET (16:58 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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