LONDON: The Madrid stock market soared on Monday (Oct 30) on investor relief over an apparent easing in Spain's Catalan independence crisis, dealers said.
Other European, and also Asian, equity markets meanwhile diverged in hesitant trade before this week's key Japanese and US central bank announcements.
Wall Street was lower as stocks pulled back from recent record high levels "kicking off a week that will bring heavy doses of earnings and economic data", including Apple results, analysts at the Charles Schwab brokerage said.
Spanish shares had plunged on Friday after Catalan lawmakers voted to declare independence from Spain, but Madrid immediately moved to quash the breakaway bid.
However, Madrid's benchmark IBEX 35 index of major companies had rallied by 2.4 per cent by the close on Monday, while the euro regained its composure after touching a three-month dollar low on Friday.
"We think that financial markets are right to take a relaxed view of the constitutional crisis in Catalonia," said Andrew Kenningham, Chief Global Economist at Capital Economics. "The economic fallout for Spain itself should be small, and the risks to the euro-zone are even smaller."
Earlier on Monday, Spain reported vigorous growth in the third quarter but local economists and business groups warned the crisis in wealthy Catalonia could impact the economy going forward.
Spanish banks were among the main risers in Madrid, including Catalonia's CaixaBank and Banco Sabadell which surged 4.2 per cent and 5.7 per cent, respectively.
"After an escalation of the Catalan crisis on Friday, Spanish markets are in recovery mode at the start of this week," said City Index analyst Kathleen Brooks. "This is largely in response to the peaceful transferral of power to Madrid from the Catalan authorities over the weekend."
Spain nevertheless enters uncharted and potentially perilous territory on Monday as Madrid moves to take over the running of Catalonia in response to the rebellious region's parliament unilaterally declaring independence.
Spanish Prime Minister Mariano Rajoy has dissolved Catalonia's parliament and called Dec 21 elections for the region.
THE BRIGHT SIDE, CAUTIOUSLY
"Tensions have been put on ice for a while after Madrid took direct control and a major unionist rally over the weekend. But this is likely to be temporary with elections due in December," said ETX Capital analyst Neil Wilson.
"For now, it seems that investors are prepared to look on the bright side, albeit with due caution."
Elsewhere, Asian stock markets were largely flat on Monday as investors locked in gains on earnings reports.
The US Federal Reserve meanwhile is to begin its two-day meeting on Tuesday, with President Donald Trump expected to announce the Fed's next chair by Friday before he embarks on an 11-day Asia tour.
Hong Kong-listed shares in banking giant HSBC briefly rose on news that profits had leapt fivefold in the third quarter to US$4.6 billion on booming Asian business and a huge restructuring drive. But they later fell back on profit-taking, losing over 1.5 per cent in London.
Oil prices rose as investors detected growing evidence that OPEC and other producers will extend a landmark output cut deal.
Saudi Crown Prince Mohammed bin Salman said last week that Riyadh would "of course" give its backing to a rollover of the agreement.
Key figures around 1640 GMT:
Madrid - IBEX 35: UP 2.4 per cent at 10,446.00 points
London - FTSE 100: DOWN 0.2 per cent at 7,487.81 (close)
Frankfurt - DAX 30: UP 0.1 per cent at 13,229.57 (close)
Paris - CAC 40: FLAT at 5,493.63 (close)
EURO STOXX 50: UP 0.3 per cent at 3,662.18
New York - DOW: DOWN 0.3 per cent at 23,357.05
Tokyo - Nikkei 225: FLAT at 22,011.67 (close)
Shanghai - Composite: DOWN 0.8 per cent at 3,390.34 (close)
Hong Kong - Hang Seng: DOWN 0.4 per cent at 28,336.19 (close)
Euro/dollar: UP at US$1.1640 from US$1.1604 at 2100 GMT
Pound/dollar: UP at US$1.3212 from US$1.3131
Dollar/yen: DOWN at 113.06 yen from 113.67 yen
Oil - West Texas Intermediate: UP 12 cents at US$54.02 per barrel
Oil - Brent North Sea: UP 7 cents at US$60.19