Europe close: Spanish stocks bounce back as Constitutional Court wades in again

Stocks ended the session mostly higher, led by a rebound in shares of Spanish lenders and strong demand for the country's bonds at three auctions.

Against that backdrop, by the closing bell the benchmark Stoxx 600 was 0.16% or 0.63 points higher to 381.03, alongside a dip of 0.02% or 2.47 points for the German Dax which saw the day out from 12,968.05.

The FTSE Mibtel on the other hand rose by 0.49% or 109.65 points to 22,566.03.

In Spain the Ibex 35 bounced back 2.51% or 249.80 points to close at 10,214.70 on Thursday as Spain's Constitutional court suspended a plenum of the Catalan parliament scheduled for Monday at which it was thought that the regional authorities might decide to forge ahead with a unilateral declaration of independence.

That followed an appeal from the region's Socialist party to block it.

Earlier in the day, one of the region's largest lenders, Banco Sabadell, announced a decision to redomicile from Barcelona to Alicante and according to Europa Press, the next day CaixaBank - one of Catalonia's most emblematic firms - was set to vote on a redomicile - likely to the Balearic islands.

Acting as a backdrop, strong demand from local institutions saw a sale of five year government debt draw a solid bid-to-cover ratio of 2.1, alongside strong bidding at a 12-year bond and seven-year inflation-linked debt auctions.

Overnight, the regional president, Carles Puigdemont, had reiterated a call for outside "mediation" between his government and the authorities in Madrid.

In reply, Spain's finance minister, Luis de Guindos, on Thursday told Bloomberg that independence was out of the question and that there was nothing to discuss until the rule of law is reestablished - labeling Puigdemont's independence drive "insane".

Two days before, Puigdemont had told the BBC he would make a unilateral declaration of independence "at the end of this week or the beginning of next".

Beyond Spain, the minutes of the European Central Bank's lost policy meeting revealed that its chief economist had recommended "close monitoring" of the euro's exchange rate as policymakers debated a range of options to pare back the volume or duration of its asset purchase programme.

Elsewhere, Greek unemployment declined from 21.3% in June to 21.0% for July, according to ELSTAT.

In other corporate news, Reuters reported that Spain’s Gas Natural had decided upon a sale of its Italian retail unit to EDF subsidiary Edison and its distribution network to 2i Rete Gas.