Analysts eye fresh regional elections in Spain's Catalonia region

The independence movement in Catalonia suffered somewhat of a set-back over the weekend, with new regional elections now considered by analysts to be far more likely.

Over the weekend, the far-left CUP party decided that it would not throw its hat in the ring with the current Catalan executive Artur Mas, the president of the ruling CDC party who was also at the helm of the pro-independence Junts Pel Si platform.

If no agreement could be reached by 10 January then new elections – likely to be held in March - would be triggered, Alberto Gallo, head of macro strategy at RBS said in a research note to clients.

Gallo believed the aspirations of many people in the region for greater autonomy from Madrid would continue to figure large in Spanish politics, although he added that the “risks of Catalan independence will be limited to negative headlines”.

As of 14:12 Spain’s Ibex 35 equity index was trading 2.39% lower to 9,316 points but still outperforming its peers on the Continent.

The yield on the benchmark 10-year Spanish Treasury note was off by four basis points to 1.73%.

Mas was scheduled to make a public appearance on Tuesday, following his party's weekly meeting, at which politicians were expected to decided whether or not to call for fresh regional elections in March.