* Conciliatory tone comes as independence stance softens
* Spanish bonds still record worst week in three months
* Global bond yields rise on mixed U.S. data
* Gap between Spain-Catalonia yields widest in over a year
* Euro zone periphery govt bond yields http://tmsnrt.rs/2ii2Bqr
(Updates with closing prices)
By Abhinav Ramnarayan and John Geddie
LONDON, Oct 6 (Reuters) - An apology from Spain for a
violent police crackdown on Catalonia's independence referendum
settled a sell-off in Spanish financial assets on Friday,
although global bond yields were broadly higher after a mixed
U.S. jobs report.
The conciliatory gesture from Spain's representative in
Catalonia, which accounts for a fifth of the national economy,
came just as the region's secessionist leader appeared to inch
away from a plan to declare independence as early as Monday.
Spain's 10-year bond yield - which moves
inversely to the price - reversed most of rise seen earlier on
Friday as investors became concerned about plans by Catalonia's
regional parliament to meet in defiance of a ruling by the
country's main legislative court.
But the country's bonds still notched up their worst week in
three months as yields rose globally on Friday after U.S.
unemployment and wage growth data showed the resilience of the
world's largest economy in the face of a wave of hurricanes.
Analysts said the data increases the chances that the
Federal Reserve will hike rates again later this year.
"Today's U.S. employment report confirms that Janet Yellen’s
likely penultimate FOMC meeting as Chair in December will mark
the third Fed rate hike this year," said David Riley, head of
credit strategy at BlueBay Asset Management.
"If falling unemployment is at last fuelling meaningful wage
inflation - and it is important to acknowledge that it is the
first notable upward wage surprise for several months – market
expectations of the path of Fed rates for 2018 will also have to
U.S. two-year yields hit their highest level in almost 9
years after the data, while German 10-year yields -
the euro zone's benchmark - hit a one-week high, just over 0.50
Most euro zone 10-year yields closed flat or slightly higher
on the day, including Spain's which had earlier been as much as
7 bps higher.
Spain's yields have risen 10 bps this week, marking their
worst period since early July, according to Tradeweb data.
Madrid's main stock index closed down 0.3 percent,
recovering ground from earlier in the session. It fell 1.88
percent on the week to mark its biggest drop in five weeks.
Spain's government on Friday passed a law to make it easier
for companies to move their operations around the country just
as some businesses consider leaving Catalonia.
The gap between Catalonia's own bond maturing in February
2020 and the Spanish equivalent hit its widest level in over a
year on Friday at 348 bps.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Toby Chopra)
First Published: 2017-10-06 10:37:12
Updated 2017-10-06 18:22:31
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