MORNING BID EUROPE-Catalan brinkmanship, businesses' Brexit beef

* A look at the day ahead from EMEA chief desk editor Angus MacSwan and EMEA markets editor Mike Dolan

LONDON, Oct (Shenzhen: 000069.SZ - news) 23 (Reuters) - The Madrid government had made it clear to Catalonia’s independence leaders - you can check out but you can never leave. The imposition of direct rule by Madrid at the weekend takes the confrontation to a new level. The immediate question is how in practical terms Madrid can enforce the measures if civil servants and other institutions resist and whether this leads to more civil disobedience. The reaction of the regional police force will be crucial. In the game of brinkmanship, the Catalan leadership on Monday morning told them they must follow its orders, not Madrid’s. On Europe's other big splittist saga, Britain's five biggest business lobby groups are writing to Brexit Secretary David Davis pleading for an urgent Brexit transition deal. Time (Frankfurt: A11312 - news) is running out and jobs and investment are at stake, they say. The signers include the Institute of Directors and the Confederation of British Industry. The government says progress is being made, but the business elite is clearly worried. And they seek a deal as close as possible to current arrangements.

MARKETS AT 0655 GMT

Japanese PM Abe’s convincing win with a two thirds ‘super majority’ in parliament was enough to send the Nikkei 225 to its highest in 21 years and clocking up its 15th straight daily gain, the longest streak since 1961. The expected continuation of ‘Abenomics’ of monetary and fiscal expansion has lifted Japanese shares for the past two weeks and the brief rise of dollar/yen above 114 for the first time in more than three months overnight was an added boon. The rise of the Nikkei has been enough to push the MSCI World index to an all-time high on Monday, following Wall St’s latest record on Friday. U.S. stock indices pushed new highs as Donald Trump’s tax cut plan cleared another hurdle in the Senate and as the U.S. President indicated that the re-appointment of Federal Reserve chair Yellen was still a possibility, even if it was likely now a three-horse race between Yellen, Fed governor Powell and Stanford University economist Taylor. U.S. Treasury yields are steady to a touch higher.

U.S. stocks have also been lifted by an above-forecast Q3 U.S. earnings season so far. With (Other OTC: WWTH - news) almost a fifth of the S&P500 already out, actual annual earnings growth is running just above 10 percent. This week will be crucial however, with the big tech and internet stocks such as Amazon, Alphabet (Xetra: ABEA.DE - news) , Intel (Euronext: INCO.NX - news) and Microsoft (Euronext: MSF.NX - news) all due to report.

The dollar was a touch firmer across the board, including against the euro as traders await the European Central Bank’s decision on tapering its massive bond-buying programme on Thursday. The expectation is a reduction of its monthly totals, but an extension of the programme of up to 9 months into next year. European markets will also keep a close eye on developments in Spain, where Madrid at the weekend took the unprecedented step of firing the Catalan government in a bid to thwart the region's push for independence. How it practically implements direct rule and how the regional assembly reacts are now the next stages of the saga. Madrid wants to push for new regional elections, while the regional government will likely urge civil disobedience to any moves on direct rule. Futures on Spain’s blue-chip IBEX index are a fraction lower early Monday, with many expecting them to continue to underperform the broader region as the Catalan tensions simmer.

Eurostocks futures are up a touch as the earnings season in Europe gets underway in earnest this week too. A sharp rise in profit warnings issued by British companies in the third quarter, the biggest quarterly rise in almost six years, also does not do much to cheer things up. Brent crude oil prices are fractionally higher but just below $58 per barrel.

* Europe corp events: Luxxotica sales, Philips (Amsterdam: PHIA.AS - news)

* UK CBI Oct orders

* Belgium auctions OLO govt bonds

* ECB’s Nouy speaks in London

* Eurogroup chief Dijsselbloem speaks in Dublin

* UK PM May updates parliament on EU summit and Brexit talks; UK Brexit negotiator Davis in Paris for talks

* EU Commission chief Juncker speaks in Strasbourg

* Turkey Oct consumer confidence

* US Q3 earnings: State Street, Halliburton (Swiss: HAL.SW - news) , Hasbro (NasdaqGS: HAS - news) , Kimberly-Clark, Whirlpool (Sao Paolo: R2:WHRL3S.SA - news) , Seagate Tech etc (editing by John Stonestreet)