October 10, 2017 / 11:25 AM / a year ago

GLOBAL MARKETS-Spanish separation angst keeps Europe's stocks cautious

* European bourses subdued, focus on Catalonia

* Dollar falls for third day running, lira pulls out of dive

* Korea stocks rally after more than week-long holiday

* Crude oil futures rise 1 percent as Saudi trims exports

By Marc Jones

LONDON, Oct 10 (Reuters) - World shares ground out a fresh record high on Tuesday, making it almost 50 for the year, although Europe traded cautiously as markets waited to see whether Spain's Catalonia region would push for independence later in the day.

Japan and South Korea returned from extended breaks to give Asia a lift, but the Catalan uncertainty meant the euro zone's main bourses and Spanish bond markets spent the morning in the red.

Catalonia's secessionist leader Carles Puigdemont is due to address the region's parliament in Barcelona around 1600 GMT and could ask the assembly to vote on a unilateral declaration of independence from Madrid.

It had turned into Spain's biggest political crisis since an attempted military coup in 1981. Madrid's IBEX stocks index dropped 0.7 percent by midday and is now down almost 9 percent since May, though a sharp rise in the euro has also taken a toll.

"We have not witnessed any relevant statement or signal by the separatists that would hint at a change of strategy ahead of today's discussion in the Catalonian parliament," economists at Barclays wrote.

"Consequently, at this point, it seems likely that Catalan President Carles Puigdemont remains on track to announce a unilateral declaration of independence as early as today."

The euro remained resilient. It hopped to a one-week high as data showed German exports surged in August. Traders were also still upbeat on the currency after one of the European Central Bank's German policymakers called for an end to its stimulus.

There was also help from a weaker dollar which was down for a third straight day. The dollar index, which tracks the greenback against six major rivals, dropped 0.2 percent to 93.533 and away from Friday's almost 3-month peak.

It gave the Turkish lira a breather after it had been sent sprawling to a nine-month low on Monday after the United States and Turkey scaled back visa services.

Mexico's peso hovered at its weakest in more than four months too, ahead of the latest round of talks over the North American Free Trade Agreement (NAFTA) on Wednesday.

"Mexican asset prices have been very well supported this year so we think there needs to be a little bit of caution," said UBP's EM macro and FX strategist Koon Chow.

"There is not much of a cushion for bad news now and NAFTA talks are unlikely to bring any good news."


Futures markets pointed to Wall Street breaking a two-day run of falls with the third quarter earning season now gathering steam. Bond markets were waiting to see if 10-year Treasuries would get above 2.4 percent ahead of another Fed rate hike.

Overnight, MSCI's broadest index of Asia-Pacific shares outside Japan had climbed 0.6 percent, boosted by a 1.6 percent jump in Korea as shares of firms such as Samsung which have been closed for the past week, caught up with some of the global rally.

Japan's Nikkei brushed off a weak start to finish 0.6 percent higher too, though China stocks dipped as investors cashed in some of the gains that took them to a 21-month high in the previous session.

China's Statistics Bureau on Tuesday said the country would have no problem meeting its economic growth target of around 6.5 percent this year, and might even beat it. Such an outcome had been widely expected after a robust start to the year.

The offshore Chinese yuan rate surged to its strongest level in more than two weeks. The central bank had also set a firmer-than-expected official rate, suggesting authorities are keen to keep the currency in check ahead of next week's key national leadership meeting.

The stocks gains came in spite of tensions on the Korean peninsula. Russian Foreign Minister Sergei Lavrov told U.S. Secretary of State Rex Tillerson in a phone call on Monday that any further escalation of the situation was unacceptable.

China had also called for restraint. U.S. President Donald Trump warned over the weekend that "only one thing will work" in dealing with Pyongyang, hinting that military action was on his mind.

In commodities, Brent oil prices pushed back above $56 a barrel after top producer Saudi Arabia signalled it would trim its exports and as OPEC flagged ongoing efforts to try to restore the longer-term "balance" of the market.

Brent jumped 50 cents to $56.31 a barrel, while a 54 cents rise took U.S. crude back to $50 a barrel.

"The kingdom expects all other participants in the (agreement) to follow suit and to maintain the high levels of overall conformity," a Saudi oil Ministry spokesman said.

Gold prices also hit their highest in more than a week against the backdrop of a weaker dollar. Spot gold added 0.5 percent to $1,290 an ounce.

Additional reporting by Helen Reid in London and Lisa Twaronite in Tokyo; Editing by Alison Williams

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