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Spain court pressures Catalans in tense independence standoff

SPAIN COURT PRESSURES CATALANS IN TENSE INDEPENDENCE STANDOFF

Spanish judges ordered Catalan lawmakers Thursday to suspend a planned session that could see the region declare independence as the national government rejected calls for mediation in a volatile standoff.

The move raised the stakes in Spain's deepest political crisis in a generation.

Violence erupted last weekend during Catalonia's independence referendum outlawed by Madrid.

Catalan regional president Carles Puigdemont lashed out at the government's "catastrophic" handling of the crisis and said he was open to mediation.

But Prime Minister Mariano Rajoy's office retorted that the government "will not accept blackmail."

Rajoy himself on Thursday called on Catalan leaders to "return to legality," in an interview with the Spanish news agency EFE.

- 'NOT AFRAID OF JAIL' -
Catalan leaders have threatened to declare independence within days -- possibly during Monday's plenary session in the regional parliament.

But the Constitutional Court on Thursday ordered the session to be suspended while it hears an appeal by rival politicians.

It warned that any session carried out in defiance of its ban would be "null."

It said the parliament's leaders could face criminal action if they ignore the court order.

Puigdemont and other Catalan leaders have said they are not afraid of going to jail over their independence bid.

They carried out the referendum in defiance of a ban by the Spanish court and stern warnings from the national government in Madrid.

- POLICE VIOLENCE -
Thursday's ruling raised the question of how the Spanish state will respond if Catalans decide to push ahead with Monday's session.

The vote on Sunday saw shocking scenes of police with batons beating unarmed voters.

The vote was not carried out according to regular electoral standards but Puigdemont said it had lent legitimacy to the independence drive.

If Catalonia declares independence, Spain could respond by suspending the region's existing autonomous status and imposing direct rule from Madrid.

The speaker of the Catalan parliament Carme Forcadell warned such a move "would just increase support for the pro-independence side."

Catalan authorities claim 42 percent of voters cast ballots in the referendum and that 90 percent of those backed independence.

Madrid has branded the vote a "farce" and Spain's King Felipe VI sided with the central government, accusing separatist leaders of endangering Spain's "stability."

- ECONOMIC FEARS -
The economic stakes were rising over tensions in the tourist-friendly northeastern region.

"All of Spain is starting to feel the Puigdemont effect," said Esteban Gonzalez Pons, a European Parliament deputy and senior figure in Spain's governing Popular Party.

"It is having a devastating effect on the economy."

Catalonia is the country's richest region, accounting for a fifth of Spain's economy and home to thousands of domestic and foreign companies employing millions of people.

Spain's fifth-biggest bank Sabadell was set to discuss Thursday whether to shift its legal domicile away from Catalonia in response to the crisis, a spokesman said.

Media reports said Catalonia's biggest bank, CaixaBank, was considering a similar move.

Spain's Finance Minister Luis de Guindos played down the economic threat, insisting Spain would block independence.

"This is not a question of mediation... This is a question about enforcing the law," he told Bloomberg news agency.

- MARKETS 'WORST SINCE BREXIT' -
With its own language and cultural traditions, demands for independence in Catalonia date back centuries but have surged during recent years of economic crisis.

Spanish media coverage on Thursday was dominated by concerns for the eurozone's fourth biggest economy.

Leading daily El Pais headlined that the stock market drop was "the worst since Brexit" was approved in Britain's June 2016 referendum.

The overall Ibex 35 index of leading Spanish shares recovered on Thursday, up about 2.3 percent following a sharp fall of nearly three percent the day before.

But CMC Markets UK analyst David Madden warned investors that "should not be viewed as a sign that the relations are improving."

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