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Spanish shares lag European markets on Catalonia uncertainty

Published 10/16/2017, 04:06 AM
© Reuters. The German share price index, DAX board, is seen at the stock exchange in Frankfurt
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By Danilo Masoni

MILAN (Reuters) - Spanish stocks lagged a steady European market on Monday as uncertainty over the Catalonia crisis and a profit warning from renewables energy firm Siemens Gamesa weighed.

Spain's country index IBEX (IBEX) fell 0.7 percent by 0750 GMT, while the pan-European STOXX 600 benchmark (STOXX) added 0.1 percent, staying near the four-month highs hit last week as optimism over global growth offset growing political worries.

Catalan leader Carles Puigdemont on Monday failed to clarify whether he had declared independence from Spain last week, paving the way for the central government to take control of the wealthy region.

Spain's Prime Minister Mariano Rajoy had given him until 0800 GMT on Monday to clarify his position, and until Thursday to change his mind if he insisted on a split - and said Madrid would suspend Catalonia's autonomy if he chose independence.

"We still don't know how this political conflict will end, but it will no doubt create downside risk to the single currency," said Hussein Sayed, chief market strategist at FXTM.

Jitters over Catalonia sent the euro to the day's low against the dollar.

That in turn supported the export-oriented German index DAX (GDAXI), which rose 0.2 percent with Bayer (DE:BAYGn) up for a second day after announcing on Friday a $7-billion asset sale that will pave the way for its acquisition of Monsanto (NYSE:MON).

In Madrid, Spanish banks Caixa (MC:CABK), Sabadell (MC:SABE) and BBVA (MC:BBVA) were among the most hit, all down more than 1 percent, while Siemens Gamesa was the top faller, down 8.1 percent after it warned on profit on Friday. Caixa and Sabadell are the most exposed to Catalonia among Spanish lenders.

Top faller on the STOXX was ConvaTec (L:CTEC), down 15.2 percent after the British medical technology company cut its full-year organic revenue growth forecast due to supply issues in the third quarter.

A sales warning also sent shares Husqvarna (ST:HUSQb) down more than 4 percent.

The Swedish company said net sales in its Consumer Brands Division would take a 1 billion Swedish crown hit next year as it cuts back business with a major U.S. client.

Higher metal and crude oil prices, however, supported the broader market, sending heavyweight mining stocks like Glencore (L:GLEN), Rio Tinto (L:RIO) and BHP (L:BLT) up more than 2 percent.

Elsewhere Germany's Hochtief (DE:HOTG) rose 3.4 percent.

The rise follows an upgrade to "buy" from "hold‍​" from Bankhaus Lampe on prospects of a potential acquisition of Spanish motorway firm Abertis in a takeover battle with Italy's Atlantia.

© Reuters. The German share price index, DAX board, is seen at the stock exchange in Frankfurt

"If Hochtief acquires the toll operator Abertis, the upside potential for shares should be considerable and lift the price above euro 200," Bankhaus Lampe said.

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