Spanish equities slide, euro up before independence call

Madrid’s stock market fell yesterday, while the euro rose versus the dollar, with all eyes on whether Catalonia’s leader will declare the region’s independence from Spain, a key eurozone economy.Outside the eurozone, London’s benchmark FTSE 100 stocks index climbed as traders shrugged off news of a widening British trade deficit and slowing UK industrial growth against a background of Brexit uncertainty.Shares in BAE Systems shed 0.3% to 616.5 pence after the British maker of defence equipment said it plans to cut almost 2,000 jobs, mainly owing to weaker demand for Eurofighter Typhoon and Hawk fighter jets.The FTSE 100 closed 0.4% up at 7,538.27 points.Eurozone “equities are trading lower thanks to a stronger euro and Catalonia worries”, with the single currency weighing on share prices of multi-nationals earning in other currencies, said IG analyst Chris Beauchamp.Spain’s worst political crisis in a generation meanwhile comes to a head yesterday as Catalonia’s leader could declare independence from Madrid in a move that would send shock waves through Europe.Whether or not Carles Puigdemont will follow through on his threat to announce a full breakaway — defying the central government and Spanish courts — was still anyone’s guess.“The uncertainty is weighing heavily on risk appetite but it currently only appears to be directly impacting Spanish assets, with the euro showing little or no sign of being negatively affected,” said Craig Erlam, senior market analyst at Oanda currency trading platform.The crisis has caused deep uncertainty for businesses in one of Spain’s wealthiest regions.A string of companies have already moved their legal headquarters — but not their employees — from Catalonia to other parts of the country. Madrid’s IBEX 35 closed 0.9% down at 10,145.80 points.Elsewhere in Europe, Frankfurt’s DAX 30 closed 0.2% down at 12,949.25 points, Paris’ CAC 40 ended 0.04% down at 5,363.65 points, while the EURO STOXX 50 finished 0.4% down at 3,597.39 points.Wall Street stocks were mixed heading towards midday, after all three major indices struck new record highs shortly after the open.“The risk-on appetite in America is still going strong as the major equity benchmarks keep setting fresh records,” said market analyst David Madden at CMC Markets UK.Elsewhere yesterday, traders sent shares rallying in Japan and South Korea as they returned from a long weekend, while most other Asian markets tacked on gains despite a soft lead from Wall Street.Unease over US-North Korea tensions also subsided as Kim Jong-un’s regime did not launch, as some had feared, another long-range missile to mark the anniversary of the founding of the ruling party yesterday.