* STOXX 600 down 0.7 percent at close
* Madrid may impose direct rule in Catalonia
* IBEX, Banks suffer
* Publicis, Unilever, Kion Q3 disappoint (Updates prices at close, adds detail and quote)
By Julien Ponthus and Helen Reid
LONDON, Oct 19 (Reuters) - European shares fell across the board on Thursday as Spain's political showdown with Catalonia deepened, and a batch of third-quarter results brought some disappointments for investors.
The pan-European STOXX 600 touched its lowest level this month and ended the session down 0.7 percent after Catalonia failed to meet a deadline set by Madrid to renounce its independence bid, setting Prime Minister Mariano Rajoy on course to impose direct rule on the region.
Madrid's IBEX also fell 0.7 percent.
Bank stocks were out of favour, down 0.8 percent, with Banco Sabadell dropping 1.7 percent, the second-biggest weight on the index after HSBC.
"The market is going in risk-off mode", said Pierre Martin, a senior sales trader at Saxo Bank, said.
Elsewhere some big, earnings-related falls also soured the move, with shares in advertising group Publicis dropping 6.6 percent after third-quarter sales were below market forecasts.
German forklift truck and robotics maker Kion was another big faller, plunging 13 percent after it cut its 2017 guidance, while British mid cap IWG slumped 32.2 percent on the back of a profit warning.
Unilever fell 5.5 percent as its underlying sales growth missed analysts' consensus, having lost market share to smaller rivals.
"Unilever seems to believe that annual growth goals can still be met, despite being blown off course in the third quarter," Ken Odeluga, market analyst at City Index, said in a note.
"But without a step change in growth initiatives investors will remain restive - just as activist groups are tightening their focus on health and personal care giants," Odeluga added.
The drop in Unilever's shares weighed on Europe's personal and household goods index, which dropped 2 percent and posted its worst day in three months.
On the positive side, French retailer Carrefour and spirits group Pernod Ricard were both up 3.4 percent after their results.
More broadly on earnings, Saxo Bank's Martin argued that while the initial reaction from investors seemed to be negative, it was still too early to get a clear picture of Europe's third-quarter earnings season.
European third-quarter earnings are seen growing 4.5 percent from the same period in 2016, an increase of 1.3 percent excluding the energy sector, according to Thomson Reuters I/B/E/S data.
Reporting by Julien Ponthus and Kit Rees