Spain’s relationship with Catalonia was stretched to breaking point on Sunday, as the central government’s attempts to prevent a controversial independence referendum in the northeastern region led to violent scenes and criticism from European politicians.
The referendum took place following weeks of uncertainty after the Spanish government and courts, deeming the vote illegal, took strident measures to thwart it.
The Catalan nationalist government, which organised the vote, hailed it as a success against the odds, announcing on Sunday night that about 2.26 million people had cast a ballot in the referendum, 90 per cent of whom had voted in favour of secession. This represents a turnout of about 42.3 per cent of Catalonia’s 5.34 million voters.
The Spanish government had deployed thousands of police to Catalonia in recent weeks, specifically for the referendum, raising concerns of possible violence on the day itself.
Those fears proved well-founded as riot police carried out raids on schools that were being used as voting stations and forcibly removed voters. Their use of batons and rubber bullets led to bloody scenes in Barcelona and other cities, and more than 800 people were injured, according to the Catalan government.
Riot police broke into the school in the town of Sant Julià de Aramis, where Catalan premier Carles Puigdemont was due to vote, having pulled voters away and smashed at the door of the building with an axe. Mr Puigdemont later voted in a town nearby.
Denouncing the violence, he said the police’s tactics “would bring shame on the Spanish state for ever.”
Meanwhile, the dollar soared on Monday as U.S. Treasury yields hit their highest level since mid-July, while Spanish borrowing costs rose and stocks fell as a violent police crackdown on an independence vote in Catalonia rattled investors.
Other European bourses rose and Wall Street looked set to open up 0.2 percent, according to index futures.
Firming expectations the U.S. Federal Reserve will raise interest rates for a third time this year and talk of a potentially more hawkish successor to Fed Chair Janet Yellen combined to push Treasury yields higher.
Ten-year yields topped 2.37 percent, up 4 basis points on the day, pushing the dollar half a percent higher against a basket of currencies.
“The dollar is stronger on higher Treasuries, and the market is seeming to play the idea that the Fed might become more hawkish when we look at the possible candidates for the board of directors,” said Antje Praefcke, FX strategist at Commerzbank.
Treasury yields later pulled back – the 10-year yield last stood at 2.34 percent, up just 1.3 basis points on the day, but the dollar index retained most of its gains.
The euro fell 0.7 percent to $1.1733, though traders said the Catalan referendum had only a limited impact on the single currency.
But in Spain, the IBEX stocks index fell 1.4 percent, underperforming the pan-European STOXX 600 index, which rose 0.3 percent.
The two biggest fallers on the IBEX index were Catalonia-based Banco de Sabadell and Caixabank, down 5.3 and 4.1 percent respectively.