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Catalonia independence declaration makes mark on markets

Carles Puigdemont, Catalonia’s president, center right, and Oriol Junqueras, Catalonia’s vice president, center, join pro independence mayors following a vote in favor of independence at the Catalan parliament in Barcelona on Friday.

Stocks, bonds and currency markets moved Friday as the situation in Spain escalated following a declaration of independence by the Catalonia parliament.

Following a vote by the parliament to declare independence, the Spanish Senate approved measures that will give Prime Minister Mariano Rajoy power to seize control of the Catalan administration under Article 155 of the 1978 constitution.

Following the moves, the country's 10-year government bond yields rose 3.12%, or 5 basis points, to 1.588%, while the country's stock index, the Ibex, fell 1.45% over the day to Spain's market close.

The euro depreciated 0.6% against the dollar to $1.16.

"For the first time in a number of years, currency markets have taken note of European politics," said Richard Benson, co-head of portfolio investments at Millennium Global Investments. "Up until now this appeared to be an internal Spanish issue, but now the almost inevitable escalation is being taken seriously by currency markets. We are not entirely sure what it means for macro markets … but it can't be positive," he added.

The Catalan declaration followed a referendum Oct. 1 that saw voters in favor of independence from Spain.

In a statement on the U.S. Department of State website, department spokesperson Heather Nauert said: "The United States enjoys a great friendship and an enduring partnership with our NATO ally Spain. Our two countries cooperate closely to advance our shared security and economic priorities. Catalonia is an integral part of Spain and the United States supports the Spanish government's constitutional measures to keep Spain strong and united."

Others took to Twitter to react to the news.

Donald Tusk, president of the European Council, said in a tweet: "For EU nothing changes. Spain remains our only interlocutor. I hope the Spanish government favors force of argument, not argument of force."

Bloomberg contributed to this story