Wattel and Larrazabal carded flawless rounds of 67, five under par, to lead by one from France's Gregory Bourdy, Ireland's Peter Lawrie, South African Thomas Aiken and England's Anthony Wall.
Wattel was only one under par after 11 holes, but birdied the 12th, 15th, 16th and 18th at El Prat, while Larrazabal went to the turn in 34 and picked up three birdies on the back nine.
That gave the home fans plenty to cheer, with Jesus Maria Arruti also two off the lead after a 69, but defending champion Alvaro Quiros was back on two over after a 74.
“Good conditions to make a good score this morning, with no wind and fresh greens,” said Qualifying School graduate Wattel.
“Ideal to play this morning. It’s going to be harder tomorrow - more windy.
“I’m quite confident. I worked a lot on my swing so I feel good. It’s a tough course, you have to be really straight and long from the tee and quite accurate. You have to be accurate and patient.”
Quiros was aiming to emulate something last achieved by Max Faulkner in 1953 by successfully defending the title.
But the 28 year old ran up a double bogey on the 16th and also carded four bogeys to lie in a share of 87th.
Former Ryder Cup Captain Colin Montgomerie was among the later starters and began with birdies at the first two holes before a bogey on the fourth slowed his charge.