MORNING BID EUROPE-Catalonian show-down, Brexit stand-off

* A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own.

LONDON, Oct (Shenzhen: 000069.SZ - news) 19 (Reuters) - Spain's political showdown with Catalonia hits new heights today. In an unprecedented move since Spain returned to democracy in the late 1970s, Prime Minister Mariano Rajoy has said he will impose direct rule in Catalonia unless the region's leader Carles Puigdemont retracts by 10 a.m. (0800 GMT) the ambiguous statement of intent on independence which he made last week. Puigdemont made clear yesterday that any moves to direct rule would trigger an explicit and formal declaration. All this could still take days to play out on both sides - with fears of social unrest and further negative fallout for the eurozone's fourth largest economy.

British Prime Minister Theresa May heads to Brussels today to deliver what is by now her familiar pitch over dinner to sceptical EU counterparts about the need to move ahead on Brexit negotiations. She (Munich: SOQ.MU - news) has sought to improve the atmosphere by reassuring EU expats living in the UK that they will be allowed to stay after Britain leaves the club, but this is unlikely to cut much mustard with her European peers. As she heads back to London tomorrow, they will in her absence conclude that not enough progress has been made on Britain's divorce bill to proceed to the next phase of negotiations. As a small gesture, they will also likely agree to prepare work on the transition period which London now accepts will be needed to avoid a cliff-edge Brexit in March 2019.

Away from all such show-downs and stand-offs, Italy's separatist-minded north is playing its cards cautiously. Lombardy, the region which is the country's industrial engine and home to its financial capital Milan, holds a referendum on Sunday not on secession but on more autonomy - an outcome it hopes will lure more investment. While non-binding, the votes in Lombardy and the Veneto region around Venice are a pitch to get a better financial deal from Rome. A 'yes' vote would not be binding, but Lombardy says it would increase its leverage. It wants to use any extra cash on research and development, nurturing start-ups and offering tax holidays to attract big international firms. On the former push for outright independence? "Not for now," its leaders say.

MARKETS AT 0655 GMT

While minds drift back 30 years to the day to the 1987 stock market crash, today’s equity markets continue to clock up milestone after milestone. The Dow Jones closed above 23,000 for the first time late on Wednesday, powered by a near 9 percent surge in IBM (NYSE: IBM - news) after its Q3 results. The S&P500 also eked out another record as the first 12 percent of the firms in the index to report Q3s so far recorded actual annual profit in the quarter of 11 percent. The Vix volatility gauge is stuck near historical lows at 10 percent. Asia bourses were more mixed, but the Nikkei 225 recorded its 13th straight daily rise, the longest such winning streak for that index since 1988, as polling ahead of Sunday’s Japanese election look favourable for Prime Minister Shinzo Abe. Taken all together, the MSCI World index of global stock markets, now up 17.6 percent in the year to date, set another all-time high early on Thursday too. Chinese stocks bucked the trend overnight however, seemingly underwhelmed by the latest sweep of either in-line or above forecast Chinese economic data. Chinese Q3 GDP slowed a touch to 6.8 percent as forecast, but September industrial output and retail sales growth were well ahead of expectations. Shanghai and HK markets ended slightly in the red, with one eye on the twice-a-decade Communist Party congress underway and another on the warning from central bank governor Zhou about how Beijing authorities will fend off the risk that excessive optimism and rising household and corporate debt lead to a "Minsky Moment", or sudden collapse of asset prices.

In Europe, stock markets are expected to open flat to a touch lower amid a welter of earnings reports across the continent as some eye the 8 GMT deadline from Spain’s government for the regional Catalan assembly to drop its independence bid or face direct rule from Madrid. Spanish government bonds and the IBEX index of Spanish blue chips were flat ahead of the deadline and the euro/dollar exchange rate was higher. Elsewhere the dollar index was broadly unchanged and U.S. Treasury yields and Brent crude were a tad firmer. For sterling, retail sales data will be in focus after August's strong performance fuelled bets of a BOE (Shenzhen: 000725.SZ - news) rate hike and there will be a close eye on the EU summit for any indications on progress or otherwise in the stalled Brexit negotiations. * Europe corp events: Telia, SAP (Amsterdam: AP6.AS - news) , Yara, Publicis (Paris: FR0000130577 - news) , Unilever (NYSE: UL - news) , Nestle (Swiss: NESN.VX - news) trading, Pernod Ricard (TLO: RI-U.TI - news) trading, LSE trading, AccorHotels trading, Roche trading, Thales (LSE: 0IW5.L - news) trading, Michelin (Paris: FR0000121261 - news) , Schroders (Frankfurt: 929969 - news)

* European Council Summit, to Fri

* Swiss Sept trade

* UK Sept retail sales; UK auctions 10-year gilts

* Spain’s deadline for Catalonia to give up indendence bid or face direct rule from Madrid; Spain auctions government bonds

* Belgium Oct consumer confidence

* Sweden Sept jobless

* US Q3 earnings: BONY Mellon, Honeywell, Paypal (TLO: PYPL-U.TI - news) , PPG, Moody’s, Danaher (Swiss: DHR.SW - news) , Verizon (NYSE: VZ - news) , Philip Morris

* US Oct Philadelphia Fed index and weekly jobless claims

* Chile (Stuttgart: 704599.SG - news) central bank policy decision

(Editing by Gareth Jones)