Europe midday: Spanish stocks up on Catalan optimism, Turkish lira thrashed

Stocks on the Continent have come off their best levels despite optimism percolating in bond markets that a political solution might be found to the impasse between regional authorities in Catalonia and the central government.

As of 1301 BST, the benchmark Stoxx 600 was ahead by 0.21% or 0.83 points at 390.30, alongside gains of 0.03% or 1.53 points to 5,361.46 for the Cac-40 and a rise of 0.06% or 7.37 points to 12,963.13 in the German Dax.

Spain's Ibex 35 on the other hand was up by 0.67% or 68.70 points to 10,254.20, with the yield on the country's 10-year government bond down by six basis points at 1.65%.

At the weekend, almost 1.0m people (350,000 according to local authorities) marched through Barcelona in defence of Spanish unity. Additionally, Madrid made an official apology for the violence that marred the previous weekend's illegal referendum.

That was followed on Monday morning by a call from Catalan foreign affairs spokesman, Raul Romeva, for dialogue.

"We need two to tango, we need the other side to be at the table", Romeva told Bloomberg News in an interview. His remarks came on the heels of Catalan president Carles Puigdemont saying, the day before, that he was still planning to push ahead with a declaration of independence.

Some observers saw Romeva's remarks as hint of an olive branch to Madrid. Nevertheless, also on Monday remarks from at least one member of the PDeCat party - a member of the ruling coalition in Catalonia - appeared to indicate that nationalist officials still intended to make a push for independence, albeit a bit more slowly, as they sought international backing.

Commenting on the situation in Catalonia, analysts at Barclays Research said Saturday's demonstrations in Barcelona made a unilateral declaration of independence "marginally less likely".

In any case, whether or not Puigdemont were to renounce making a unilateral declaration of independence or opted instead to go ahead, leading Madrid to suspend some of the region's autonomy, snap regional elections in Catalonia were now the most likely scenario, Barclays said.

Farther afield, the US dollar jumped 3.02% to 3.7238 versus the Turkish lira, after America and Turkey froze consular services for each other following the arrest of a US consulate worker the week before.

On the economic front, Sentix's euro area investor confidence index for October advanced 1.5 points to 29.7 - a new 10-year high.

Sentix concluded that the elections to the Bundestag could be considered a "success", adding that the global economic engine continues to gain strength.

Industrial production in Germany jumped by 2.6% month-on-month in August, led by a 4.8% rise in output of capital goods, according to the Ministry of Finance, dwarfing forecasts for an increase of 0.8%.

As far as the corporate news-flow was concerned, speaking to Handelsblatt Credit Agricole boss Philippe Brassac said the lender would be interested in Commerzbank if it were put on the auction block.

Down under, France's Accor offered £920m (£701m) for Mantra Group as it seeks to merge the two largest hotel owners in that country.

According to La Stampa, Spain's stockmarket regulator was set to authorise Italian rival Atlantia's takeover of Abertis.