Spain bonds, stocks sell off as Catalonia deadline passes

LONDON, Oct (Shenzhen: 000069.SZ - news) 19 (Reuters) - Spanish government bond yields rose and stocks sold off on Thursday after a deadline for Catalonia to retract an ambiguous declaration of independence made last week passed.

Catalan leader Carles Puigdemont said the regional parliament could vote on a formal declaration of independence from Spain if Madrid failed to hold talks with Catalonia, ignoring a deadline to drop a secession bid.

A source told Reuters that the Spanish cabinet would proceed with Article 155 of the constitution on Saturday (Shenzhen: 002291.SZ - news) following Puigdemont's comments.

Spanish government bond yields reversed early falls and was last trading almost 2 basis points higher on the day at 1.65 percent.

Yields on safe haven German bonds fell to the day's lows of 0.37 percent.

Spain's main stock index fell up to 1 percent after Puigdemont's letter, and was last down 0.7 percent as bank stocks weighed, while the euro dipped into negative territory. (Reporting by London Markets Team, Editing by Dhara Ranasinghe)