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Separatist parties won a slim majority in the parliament of the wealthy Spanish region of Catalonia, a result that looks likely to prolong political tensions which have damaged Spain's economy and prompted a business exodus from the region.
The result battered Spanish stocks, with Spain's IBEX falling as much as 1.1 per cent as European bourses opened. Financial stocks were the biggest drag on stock indices across the region, with the euro zone banks index falling 0.8 per cent.
The pan-European STOXX index, dipped only 0.1 per cent as Spanish stocks dominated the biggest fallers, confirming analyst expectations that any shake-out from the Catalonia vote would be mostly confined to Spain.
Germany's DAX . GDAXI edged down 0.1 per cent, in line with France's CAC 40 . FCHI.
Spanish stocks were Europe's best-performing benchmark for much of the year, before October's independence referendum sent the IBEX tumbling. It was last 9 per cent down from its May peak.
The euro momentarily dipped to $1.1817 earlier in the day as preliminary results from regional votes on Thursday showed pro-independence parties in Catalonia keeping an absolute majority. It trimmed losses to last stand at $1.1853, down 0.2 per cent.
"This is Groundhog Day, we have been here," said Christopher Peel, chief investment officer at Tavistock Wealth. "I just don't think the Spanish government can do anything other than come to the table now."
He added that thin liquidity due to the holidays could be accentuating what he called a kneejerk reaction on the IBEX. "Likely there's some hedge funds leaning on it, but in terms of long-only money I don't think there will be much movement now."
Spain's 10-year borrowing costs rose 5 basis points to a one-month high of 1.52 per cent in early trades, before settling back at 1.49 per cent.
The premium investors demand for holding Spanish bonds over top-rated German peers widened 6 bps to around 111 bps at one stage.
SIAN STOCKS RISE
The MSCI index of world stocks was flat.
S. economy grew in the third quarter at its fastest pace in more than two years.
Supporting U. S. stocks this week, and by extension global equities, was the passage through Congress of a $1.5 trillion tax-cutting bill. MSCI's broadest index of Asia-Pacific shares outside Japan was 0.5 per cent higher.
Australian stocks advanced 0.15 per cent, South Korea's KOSPI gained 0.45 per cent and Japan's Nikkei rose 0.15 per cent.
The dollar index, which measures the U. S. currency against a basket of peers, was up 0.1 per cent.
Bitcoin fell as much as 14.7 per cent to below $14,000 on the Bitstamp exchange on Friday, last trading at $13,400.
The cryptocurrency, which was at about $1,000 at the start of the year, had climbed to a record high of $19,666 on Sunday.
In commodities, U. S. crude futures slipped 0.5 per cent to $58.07 per barrel, an earlier rise losing steam as traders sold to adjust positions ahead of the year-end. The contracts had reached a nine-day peak of $58.38 overnight as OPEC started working on plans for an exit strategy from its deal to cut crude supplies, fuelling hopes it would not end supply cuts abruptly.
Brent was down 0.3 per cent at $64.72 a barrel after closing Thursday at $64.90 a barrel, its highest since June 2015.
The broader rise in commodities this week -- copper on the London Metal Exchange reached a two-month high on Thursday -- lifted the Australian dollar to $0.7718 , its highest since Nov. 2.