Daily Briefing: Catalonia – finding a way out of the stalemate

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LONDON (Reuters) – Separatist parties and unions are urging Catalans to stop working today and join a general strike to put pressure on Spanish national authorities to take note of their referendum vote in favour of independence, a result Madrid insists is invalid.

Yet Catalan leader Carles Puigdemont has meanwhile pulled back from an earlier pledge to engage parliament on a unilateral declaration of independence within 48 hours of the vote, saying he wants the European Union to help mediate what he calls “a new understanding” with the Spanish state.

Is this the opening gambit to avoid an all-out stand-off with Madrid and extract concessions from Prime Minister Mariano Rajoy? In any case, Brussels is deeply reticent about getting involved.

France’s lower house of parliament votes on anti-terrorism legislation today in the first step to having a new anti-terror bill in place by the middle of the month. The police were given wider search and arrest powers after Islamist gunmen and suicide bombers killed 130 people in and around Paris in November 2015.

The law formally puts an end to the country’s state of emergency from Nov. 1 but will enshrine some of its powers into law. The current text had been criticized as too weak by the conservative party, while some on the left say it tramples on fundamental freedoms.

Emmanuel Macron and his allies have a parliamentary majority and can count on some cross-party support so the legislation should pass.

Poland’s planned reforms of the judiciary are causing concern across Europe, now it is Romania’s turn to do the same. Its justice ministry is due to unveil a final draft of a legal overhaul which critics say could amount to step back in the fight against corruption.

Concerns include the fact that the judicial watchdog will come under political control, while the right to name chief prosecutors will also fall to a politically appointed official – both moves potentially opening the way for more interference in the justice system.

MARKETS AT 0655 GMT

New highs for world equities, flatlining volatility gauges and a sliding oil price greet the final quarter of the year.

Aside from a hit to Spanish stocks and bonds on Monday surrounding the Catalonia tensions, global markets more broadly continue shrug off political risks and stay focused on brisk economic activity, hopes for U.S. tax cuts and seeming comfort that any central bank monetary tightening will be slow and measured.

All three major U.S. benchmark stock indices set new records on Monday night, with the eye-catching jump in U.S. September manufacturing sentiment to its highest level in more than 13 years the latest driver.

The surveys echoed strong readings from China, Japan and Europe for last month and showed impressive momentum in the world economy into the end of the third quarter.

MSCI’s index of world stocks is within a whisker of its all-time high. The near-2 percent gain on Hong Kong’s Hang Seng and more than 1 percent gain in Japan’s Nikkei overnight show the broad-based nature of the ongoing equity market rally.

European stocks are expected to follow suit.

T he dollar continues to climb, emboldened by the U.S. administration’s latest push on tax cuts and the growing expectation that the Fed will raise rates for the third time this year by December.

Euro/dollar, hampered further by the Spanish tensions, dipped briefly below $1.17 in early trading for the first time since mid-August.

Sterling has also been a big loser against the rising dollar, staging its biggest loss against the greenback since the day after this year’s UK election as the ruling Conservative party held its annual conference amid speculation over UK PM May’s leadership.

Oil prices fell for a second day on signs that a global glut in crude may not be clearing as quickly as some had hoped. Brent crude was down 0.4 percent, at $55.75, further eroding third-quarter gains of some 20 percent. The Australian dollar fell to its lowest in over two months as the Reserve Bank of Australia left its key interest rates on hold.