MADRID (Reuters) - Spain's parliament voted on Tuesday to block the northern region of Catalonia from holding a referendum on independence, the latest step in a growing political battle between Barcelona and Madrid in the midst of a deepening economic downturn.
The motion to permit the referendum was brought to the lower house by the Catalan ERC party but was voted down by the ruling conservatives (PP), which hold an absolute majority, the opposition Socialists (PSOE) and the smaller UPyD party.
The heavily indebted region, responsible for a fifth of the country's economic output, voted in favor of holding the referendum at the end of September, in defiance of Madrid.
Catalonia brought forward regional elections to November 25 after regional leader Artur Mas's proposal to create a separate Catalan tax agency was flatly rejected by Prime Minister Mariano Rajoy, who said it went against Spain's Constitution.
Mas then said he would seek a referendum on an independent Catalonia, rattling already nervous international markets which have pushed up Spanish debt premiums on concerns it cannot control its finances, largely due to its over-spending regions.
Catalonia, all but shut out of international debt markets, has requested a state liquidity line for just over 5 billion euros ($6.45 billion).
Independence fervor has been growing in Catalonia during the deep recession. More than half of Catalans say they want a separate state. ($1 = 0.7754 euros)
(Reporting by Edgar Aribau; Writing by Paul Day; Editing by Michael Roddy)