European Stocks Fall, Snapping Nine Days of Gains

European stocks dropped on Wednesday, ending a nine-day winning streak, as the crisis over Catalonia’s independence referendum escalated following intervention by the king of Spain.

King Felipe VI said in a televised address late Tuesday that organizers of Sunday’s vote, which was deemed unconstitutional by the Spanish government, had put themselves “outside the law,” the BBC reported. In the meantime, secessionist leader Carles Puigdemont said his government would “act at the end of this week or the beginning of next” to declare independence. The regional government said 90% of people voted in favor of breaking away.

“Anyone hoping for a de-escalation might well have harbored hopes that the intervention of the Spanish King Felipe last night, might have been an opportunity to dial tensions back,” Michael Hewson, chief market analyst at CMC Markets in London, said by e-mail. “It was an opportunity spurned, as the King lashed out at the Catalan government without even acknowledging the casualties from the weekend events. Having miscalculated so badly with their reaction at the weekend it would appear that Spanish Prime Minister Rajoy is in no mood to compromise and looking to double down.”

The pan-European STOXX 600 index fell 0.3% despite new record highs set by the three major Wall Street stock indices in the previous session. Banks and financials were the biggest decliners, while carmakers advanced.

Centrica, the owner of British Gas, the UK’s largest energy supplier to homes, plunged 4.8% in London to the lowest since 2003 after the government confirmed a report by the Sun newspaper that Prime MInister Theresa May is planning curbs on energy prices.

Tesco dropped 2% even after saying profit climbed in the fiscal first half and that it was resuming dividend payments. Insurer Standard Life fell 2.2%.

In Frankfurt, the utility E.ON dropped 4% and Deutsche Bank and Commerzbank slid 1.5% and 1.7%, respectively.

Societe Generale and BNP Paribas lost 2.3% and 2% in Paris, while supermarket chain Carrefour fell 1.4%.

The euro-region blue-chip STOXX 50 index dropped 0.4% and the DAX in Frankfurt was up 0.3%. The FTSE 100 in London slid 0.1% and the CAC 40 in Paris fell 0.4%. The IBEX in Madrid plummeted 2.6%.

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