By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- U.K. stocks aimed higher Friday, with banking issues advancing on the prospect of an investigation settlement between major financial firms and an industry regulator.

The U.K.'s FTSE 100 index was up 0.2% to 342.24, reversing a loss as bank stocks strengthened. The move came after The Wall Street Journal reported the U.K.'s Financial Conduct Authority has spoken with six major banks about a potential settlement of a long-running investigation into possible manipulation of currency markets.

People familiar with the matter said the FCA has spoken with executive and lawyers at Barclays PLC, HSBC Holdings PLC, Royal Bank of Scotland Group PLC, as well as Citigroup Inc. (C) , J.P. Morgan Chase & Co. (JPM) and UBS AG .

In London, shares of HSBC climbed 0.7%, and Barclays and RBS each picked up 0.3%.

But pressure remained on shares of Sports Direct International and supermarket chain Tesco PLC, whose stock was facing its worst weekly performance in more than two years.

Sports Direct dropped 2.4%, extending Thursday's loss of 3.4%. The retailer, under owner Mike Ashley's direction, made a 43 million pound ($70.1 million) bet via a put-option that shares of embattled Tesco will rise, it said.

Shares of Tesco were down 0.5%. The shares were on track for a 17% weekly slide after Monday's revelation that its profit forecast was overestimated by GBP250 million stemming from an accounting error. A loss of 17% would be the biggest weekly fall since January 2012.

Off the FTSE 100, De La Rue PLC shares stumbled 33% after the bank-note printer -- whose customers include the Bank of England -- issued a profit warning for the year, as trading conditions "have deteriorated".

For the week, the FTSE 100 was in line for a 2.6% drop. Stocks on Thursday were in part hurt after BOE Governor Mark Carney said the time for an interest-rate hike is moving closer. Such a move could come as early as next year, economists have said.

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