Catalans came out onto the streets on Tuesday to condemn the police action (File)

Catalonia will move on Monday to declare independence from Spain following its banned referendum as the European Union nation nears a rupture that threatens the foundations of its young democracy.Mireia Boya, a Catalan lawmaker from the pro-independence Popular Unity Candidacy (CUP) party, said on Twitter that a declaration of independence would follow a parliamentary session on Monday to evaluate the results of the Oct. 1 vote to break away."We know that there may be disbarments, arrests ... But we are prepared, and in no case will it be stopped," she said.Catalan President Carles Puigdemont said earlier he would ask the region's parliament to declare independence following the poll, which Spain's government and constitutional court say was illegal and in which only a minority of Catalans voted."This will probably finish once we get all the votes in from abroad at the end of the week and therefore we shall probably act over the weekend or early next week," he told the BBC in remarks published on Wednesday.In an interview with German newspaper Bild, Puigdemont said he already felt like "a president of a free country where millions of people have made an important decision".He said the Madrid government's refusal to negotiate had left Catalonia "no other way" than to declare independence and he accused it of authoritarianism."The Spanish government is letting political opponents be arrested, it is influencing media and blocking Internet sites. We are under observation day and night," Puigdemont said."What is that other than an authoritarian state?"Spain was only restored to democracy following the death in 1975 of military dictator Francisco Franco, under whom the Catalan language and traditions were suppressed.The EU executive called again on Wednesday for the Spanish government and Catalan authorities to open a dialogue. "It's time to talk," the European Commission's deputy head, Frans Timmermans, told the European Parliament.The constitutional crisis in Spain, the euro zone's fourth-biggest economy, has shaken the common currency and hit Spanish stocks and bonds, sharply raising Madrid's borrowing costs, which rose to their highest since March on Wednesday.The cost of insuring against potential losses on Spanish bank debt and Spanish, Italian and Portuguese sovereign debt has also jumped, suggesting an impact on the wider euro zone.Bank stocks were hit especially hard as the Ibex stock index fell below 10,000 points on Wednesday for the first time since March 2015. In a sign of the nervous public mood, Catalonia's biggest bank, Caixabank, and Spain's economy minister had earlier sought to assure bank customers that their deposits were safe.Influential Catalan business lobby Cercle d'Economia said it was extremely worried by the prospect of Catalonia declaring independence and appealed to both sides to start talks."Such a declaration would plunge the country into an extraordinarily complex situation with unknown, but very serious consequences," the group said in a statement.Puigdemont's comments appeared after Spain's King Felipe VI accused secessionist leaders on Tuesday of shattering democratic principles and dividing Catalan society, as tens of thousands protested against a violent police crackdown on Sunday's vote.The Catalan leader was due to make a statement at 9 p.m. (1900 GMT) on Wednesday.Left-wing party Podemos proposed that the Spanish and Catalan governments sit down to agree on a mediator to help find a solution to the standoff but this idea was quickly rejected by the Madrid government.Prime Minister Mariano Rajoy thanked Podemos leader Pablo Iglesias for his proposal in talks on Wednesday but told him that Puigdemont had to give up the idea of unilaterally declaring independence, a government source said."That is not negotiable. You can't deal with people who plan to blackmail the state so brutally," the source said.In a sign that Spanish police reinforcements sent to Catalonia might be there for an extended stay, an army logistics unit sent bunkbeds, kitchens and showers to an army barracks near Barcelona in case the police need to use the military base at some point, a Ministry of Defence spokesman said.Some police staying at hotels in Catalonia have come under pressure from local residents to leave.Spain has been jolted by the Catalan vote and the Spanish police response to it, with batons and rubber bullets used to prevent people voting. Hundreds were injured in scenes that brought international condemnation.Catalans came out onto the streets on Tuesday to condemn the police action, shutting down traffic, public transport and businesses, and stoking fears about intensifying unrest in a region that makes up one-fifth of the Spanish economy.Road closures related to the protests briefly halted production at Volkswagen's Catalonia plant. Stoppages also affected production at Nestle's instant coffee plant in Girona."As a businessman, as a Spaniard and as a person, I am very worried and I am scared by what's going on (in Catalonia)," said Juan Roig, chairman of Spain's biggest food retailer Mercadona.Rajoy, a conservative who has taken a hard line on Catalan independence, faces a huge challenge to see off the issue without further unrest and potential damage to his minority government.Pro-independence parties that control the Catalan government staged the referendum in defiance of a Constitutional Court ruling that the vote violated Spain's 1978 constitution, which states that the country is indivisible.Catalonia has its own language and culture and a political movement for secession that has strengthened in recent years.Participants in the referendum opted overwhelmingly for independence, but turnout was only about 43 percent given that Catalans who favour remaining part of Spain mainly boycotted the ballot.Outside Catalonia, most Spaniards appear strongly opposed to its independence drive. In his televised address, the king said the "irresponsible behaviour" of the Catalan leaders had undermined social harmony in the region."Today Catalan society is fractured and in conflict," he said. "They (the Catalan leaders) have infringed the system of legally approved rules with their decisions, showing an unacceptable disloyalty towards the powers of the state."Opinion polls conducted before the vote suggested a minority of around 40 percent of residents in Catalonia backed independence. But a majority wanted a referendum to be held, and the violent police crackdown angered Catalans across the divide.

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(Reporting by Angus Berwick, Sonya Dowsett, Adrian Croft, Julien Toyer and Carlos Ruano in Madrid, Michael Nienaber in Berlin; Writing by Mark Bendeich and Sonya Dowsett; Editing by Julien Toyer and Mark Heinrich)