Catalonia jitters bring swift end to FTSE’S Santa rally

THE FTSE 100 eased off its record high in the final trading session before Christmas as the “Santa rally” in Europe fizzled out on reheating tensions in Catalonia.

The UK’S benchmark index inched down after surging 1.1pc to a record close on Thursday, retreating 11.32 points to 7,592.66 in a shorter-than-usual session ahead of the festive break.

The Santa rally is an end-of-year surge on stock markets said to be driven by traders reinvesting bonuses, and fund managers preparing for the new year, with a bit of festive cheer thrown in.

But markets’ apathy towards President Donald Trump’s corporate tax cuts finally squeezing through Congress has dampened this year’s rally and investor sentiment took a downward turn on events in Barcelona.

Traders in Madrid took fright at pro-independence parties snatching victory again in Catalonia’s regional elections, albeit with a smaller majority. As ousted president Carles Puigdemont declared victory from Brussels and prime minister Mariano Rajoy licked his wounds, the Ibex 35 plunged 1.6pc early on and the euro slipped back on currency markets, sinking as much as 0.5pc against the pound and 0.4pc against the dollar. Mr Rajoy’s ruling People’s Party, which was criticised for its heavy-handed approach to Catalonia’s attempt to break away, was pummelled at the ballot box, losing eight of its 11 seats in the region’s parliament. Signs that Barcelona will continue to be the centre of the bitter tug of war in 2018 lifted Spanish government bond yields and sent Madrid’s banking stocks sliding, with Cataloniaexposed Caixabank and TSB Bank owner Banco de Sabadell sinking 4pc apiece in intraday trade.

In the UK, as shoppers hit the high street for lastminute gifts, retailers drove a failed final push on the blue-chip index, with Next climbing 164p higher at £45.79 and Primark owner Associated British Foods

advancing 23p to £28.19. The FTSE 250 had better luck than its blue-chip brother, nudging up 58.34 points to 20,481.07, an all-time high. Ladbrokes Coral rallied 2.5p to 176.5p after accepting a bid worth up to £4bn from online bookie GVC, which slumped to the bottom of the mid-cap index, tumbling 21.5p to 912.5p.

Elsewhere, troubled outsourcer Carillion reversed a 5.8pc gain to finish unchanged at 17.3p despite winning some breathing room on its debt covenants from creditors.

Finally, on London’s junior Aim market, security services firm Westminster Group soared 6.9p, or 73pc, to 16.3p after revealing that it had taken a major step forward to securing a lucrative long-term deal in the Middle East.