UPDATE: Spanish stocks suffer worst day in 15 months as rift over Catalonia independence deepens
By Sara Sjolin, MarketWatch
Bond yields rise, signaling increased investor fear
Spanish stocks and bonds tumbled on Wednesday as tensions between Catalan secessionists and the government in Madrid deepened, which some market participants feared would only strengthen the resolve to push for independence.
The IBEX 35 index slumped 2.9% to close at 9,964.90, marking the benchmark's single worst day since June 24, 2016, the day after the U.K. voted to leave the European Union. It was also the first time since March that the index slipped below 10,000.
Meanwhile, the yield on 10-year Spanish government bondsrose 6 basis points to 1.771%, in a sign investors are getting uneasy about the simmering tensions in the northeastern region -- one of the wealthiest in the county.
"The Spanish market is still losing ground on account of the uncertainty in relation to Catalonia. The king of Spain took Madrid's side in the argument, and his failure to condemn the actions of the Spanish police on Sunday is likely to fuel further calls for Catalan independence," said David Madden, market analyst at CMC Markets U.K., in a note.
More than 800 people were hurt when the voting on Sunday descended into chaos and police violence. About 90% of the voters supported independence, but less than half of the people in the region cast a ballot in the controversial referendum.
King Felipe VI said in a televised statement on Tuesday (http://www.marketwatch.com/story/spains-king-says-catalan-separatists-have-undermined-harmony-2017-10-03) that the vote "undermined harmony," calling the situation "extremely serious." The king also threw his support behind Prime Minister Mariano Rajoy, who has declared the Catalan vote illegal and vowed to block any attempt by Catalonia to break away from Spain.