Spain said Thursday it will start seizing some of the Catalan regional government's powers after its leader warned he could declare independence, drastically upping the stakes as Madrid battles to keep the country together.

The central government gave Catalan separatist leader Carles Puigdemont a Thursday morning deadline to abandon his bid to declare a breakaway state, or face steps by Madrid to impose unprecedented direct rule over the semi-autonomous region.

Puigdemont, who sparked the country's worst political crisis in decades on October 1 by holding a banned referendum on splitting from Spain, retorted that Catalan lawmakers could declare independence unilaterally if Madrid makes any such move.

Madrid could potentially suspend Puigdemont's government or take over its police force under Article 155 of Spain's constitution, a never-before-used provision that would take the country into uncharted legal waters.

There are fears this could spark unrest in a region where even Catalans who oppose independence cherish their autonomy, which includes control over healthcare, education and the police.

"That suspending our autonomy is the only response to all our efforts and our willingness to enter dialogue shows there is no understanding of the problem or willingness to talk," Puigdemont wrote in a letter to Prime Minister Mariano Rajoy.

Madrid responded by accusing Puigdemont's government of "deliberately and systematically seeking institutional conflict" and vowing to move ahead with Article 155.

It called an emergency cabinet meeting for Saturday to specify how it will take control over Catalonia. The measures would then have to be approved through the Senate, a process that may last until the end of the month.

Spain's central government is moving slowly as part of a "political move to see if the unity within the independence bloc down and they finally call elections," Pablo Simon, political science professor at Carlos III University in Madrid, told AFP.

- 'Double standards' -

As the accusations flew, Rajoy headed to Brussels for a summit with other EU leaders, where German Chancellor Angela Merkel and French President Emmanuel Macron offered him vocal support.

"We back the position of the Spanish government," Merkel said as she arrived, while Macron told reporters the summit would be "marked by a message of unity" with Madrid.

But Russian President Vladimir Putin said the Catalan crisis was Spain's internal affair but slammed what he called Western "double standards" over separatist movements -- backing some like Kosovo's but not others.

The Catalan standoff has rattled a European Union that is already grappling with Brexit, while Rajoy's government fears it will damage Spain's tentative recovery from the financial crisis.

Europe's stock markets slid in response to the escalating political crisis, which is already taking a toll on the Catalan economy.

More than 900 companies have moved their legal headquarters out of Catalonia, one of Spain's most important regional economies, citing the risk of instability, while Madrid has cut its national growth forecast for next year to 2.3 percent.

Catalonia's 7.5 million residents are fiercely attached to their own language and culture but are divided on whether to break away from the rest of Spain.

Puigdemont says his regional administration has a mandate to declare independence from what he says was a 90-percent "Yes" vote, marred by a heavy-handed police crackdown on voters.

But turnout was given as only 43 percent. Many voters who oppose independence stayed away from a referendum that was declared illegal by Spain's Constitutional Court.

Madrid had on Wednesday proposed fresh regional elections, sanctioned by the central government, as a potential way out of the crisis.

But Joan Tarda, spokesman from the leftist ERC party which is part of Puigdemont's coalition, told lawmakers in Madrid: "The Catalan government will not call elections."

- 'Collective suicide' -

Catalonia's La Vanguardia daily -- Spain's second biggest newspaper -- had urged Puigdemont in an editorial to back down and call elections.

"There's no dignity in collective suicide, even less so when it's decided by one person and everyone suffers," it said in an editorial.

About 100 pro-independence protesters rallied in the rain outside central government offices in Barcelona on Thursday evening.

They chanted "Independence" and blocked the road, preventing cars from passing.

Separatists complain that Catalonia, which represents about a fifth of Spain's economic output, pours more into the national coffers than it gets back, and say it would prosper if it went its own way.

But opponents say the region has more clout as part of Spain and that the instability could be disastrous for its economy.

Source: AFP