Euro slips as Spanish stocks climb, pound weakens

London - Lingering tensions in Catalonia weighed on the euro, though Spanish stocks rose and its bonds were snapped up at auction as a key minister poured cold water on the region’s independence bid.

The pound fell against major peers as political noise swirls around UK Prime Minister May’s leadership.

The broader European equity gauge nudged lower and the dollar headed toward the highest since July as traders turned their focus to US payroll data on Friday. The single currency remains near Monday’s six-week low in the wake of the contentious vote in Catalonia.

“In the UKand in the Eurozone, markets are underestimating political risk going forward,” said Adam Cole, currency strategist at RBC Capital Markets. Euro and pound traders “have to price in a larger political risk and that supports the strength of a trend of a stronger dollar.”

In Spain, the prospect of secession has increased pressure on Prime Minister Mariano Rajoy while rattling markets. His next move could involve suspending the regional government and implementing direct rule from Madrid. Emerging-market stocks are showing signs of shrugging off declines from last month that were triggered by concern a stronger dollar would hurt developing nations’ currencies.

Minutes from the European Central Bank released on Thursday showed members discussed how to adjust monetary stimulus next year as policy makers raised concern about the rapid appreciation of the euro. In the US, fewer people filed for unemployment benefits last week as the impact of hurricanes Harvey and Irma faded.

Elsewhere, West Texas crude oil traded around $50 a barrel and the gold price climbed.

Coming Up:

The US September nonfarm payrolls report, likely to be affected by the impact of hurricanes on southern states, comes out on Friday.

Here are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index sank 0.1% as of 14:50, the largest decrease in almost three weeks.

• The MSCI All-Country World Index dipped 0.1%, the first retreat in more than a week.

• Spain’s IBEX Index gained 1.5%, the largest rise in more than a week.

• The MSCI Emerging Market Index gained 0.1%, reaching the highest in two weeks on its fifth consecutive advance.

• Futures on the S&P 500 Index rose 0.1%, hitting the highest on record with its seventh straight advance.

Currencies

• The Bloomberg Dollar Spot Index increased 0.2% to 1 166.64, the highest in 11 weeks.

• The euro declined 0.2% to $1.1732, the weakest in seven weeks.

• The British pound fell 0.8% to $1.3144, the weakest in four weeks.

Bonds

• The yield on 10-year Treasuries dipped less than one basis point to 2.32%, the lowest in a week.

• Germany’s 10-year yield declined two basis points to 0.43%, the lowest in more than a week.

• Spain’s 10-year yield fell six basis points to 1.724%.

Commodities

• West Texas Intermediate crude gained 0.3% to $50.15 a barrel, the biggest rise in more than a week.

• Gold increased 0.2% to $1 277.25 an ounce.

• Copper surged 1.8% to $6,640.50 per metric ton, the highest in more than three weeks on the biggest jump in more than five weeks.

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