EUROPE MARKETS: European Stocks Score A Fillip From Deutsche Bank To End Up
September 30 2016 - 12:51PM
Dow Jones News
By Carla Mozee, Sara Sjolin and Barbara Kollmeyer,
MarketWatch
Reports of hedge funds yanking billions of dollars from
Germany's biggest lender
European stock markets on Friday erased earlier sharp losses and
closed slightly higher as concerns over Deutsche Bank's financial
health subsided on hopes the lender will pay a lower-than-feared
fine to U.S. regulators.
The Stoxx Europe 600 index rose 0.1% to close at 342.92, after
trading with a loss of as much as 1.7% earlier in the session.
The steep drops at the open came as fears mounted that the
troubles at Deutsche Bank AG (DBK.XE) (DBK.XE) (DBK.XE)--Germany's
largest lender--would spread to the global financial markets.
Shares of the bank slid below EUR10 for the first time ever in the
morning after reports late Thursday that hedge funds had started to
pull money out of the financial major
(http://www.marketwatch.com/story/deutsche-bank-shares-tumble-after-report-says-some-clients-reduce-collateral-on-trades-2016-09-29).
Deutsche Bank's CEO John Cryan tried to calm frayed nerves
(http://www.marketwatch.com/story/deutsche-bank-ceo-blames-market-forces-for-crisis-in-letter-to-employees-2016-09-30)
over the bank's outlook, saying there "are some market forces that
want to weaken this confidence in us," in a letter sent to staff on
Friday.
(http://www.marketwatch.com/story/fearful-clients-pull-billions-of-dollars-out-of-deutsche-bank-2016-09-30)"What
must be understood here is that Deutsche Bank is the main clearing
house for trades in Europe," David Buik, market commentator at
Panmure Gordon & Co., said in a note to clients Friday. "With
over $60 trillion derivative book at the Deutsche Bank, the
government is totally incapable of even understanding how to deal
with this crisis."
Read:Deutsche Bank crisis threatens to roil global markets
(http://www.marketwatch.com/story/a-crisis-in-european-banks-threatens-to-roil-global-markets-2016-09-28)
The woes for Deutsche Bank started earlier in the September when
the U.S. Justice Department demanded the lender pays $14 billion to
settle claims it sold toxic mortgage-backed securities in the
run-up to the financial crisis. The amount sparked fears the bank
would need to raise fresh capital to cover the litigation costs as
the figure is well above its current settlement reserves.
Friday afternoon, however, the dark clouds hovering over the
bank abated somewhat after J.P. Morgan Chase & Co. in a report
estimated the fine by Justice Department will be about $5.4
billion. Additionally, Eurogroup chief Jeroen Dijsselbloem warned
the bank would, in any case, have to survive without state aid.
"What a day! What a week! Despite, or perhaps because of, Jeroen
Dijsselbloem coming out to state that Deutsche Bank won't receive
state aid the German giant has managed to claw its way back into
the green this afternoon," said Connor Campbell, financial analyst
at Spreadex, in a note.
"One could argue that the comments from Dijsselbloem prove that
the financial health of Deutsche Bank isn't as bad as suspected.
For if it the financial firm was on its last legs there is no way
the eurozone chiefs wouldn't find a way of preventing the collapse
of the region's biggest lender," he added.
Deutsche Bank shares closed 6.4% higher at EUR11.57.
Bouncy banks: The Deutsche Bank woes initially weighed on other
European banks, but the turnaround also rubbed off on the sector
into the close.
The Stoxx Europe 600 Bank Index ended up 0.6%, extending its
quarterly gain to 12%.
France's Credit Agricole SA (ACA.FR) rose 1% and UBS Group AG
(UBS) climbed 1.5%.
The national benchmarks also switched from losses to gains.
Germany's DAX 30 ended up 1% at 10,511.02, while France's CAC 40
index gained 0.1% to 4,448.26.
The FTSE 100 slipped 0.3% to 6,899.33, but still managed to log
its biggest quarterly gain in more than three years
(http://www.marketwatch.com/story/uk-stocks-turn-brexit-into-boost-on-track-for-best-quarter-since-2013-2016-09-29).
Meanwhile, the euro
(http://www.marketwatch.com/story/euro-slumps-to-one-week-low-as-deutsche-bank-fears-mount-2016-09-30)
rose to $1.1235, from $1.1223 late Thursday in New York.
Other movers: Telefónica SA (TEF) shed 4% after the Spanish
telecommunications company on Thursday canceled a planned initial
public offering of its Telxius infrastructure business because of
tepid investor demand.
Airbus Group SE (AIR.FR) rose 1%, with the aerospace heavyweight
set to cut
(http://www.marketwatch.com/story/airbus-to-cut-management-jobs-in-internal-merger-2016-09-30)
an unspecified number of management jobs as part of a restructuring
plan.
Shares of Hennes & Mauritz AB (HM-B.SK), better known as
H&M, fell 2.9%. The Swedish fashion retailer said quarterly net
profit
(http://www.marketwatch.com/story/hm-earnings-hurt-by-hot-weather-stronger-dollar-2016-09-30)
was 4.82 billion Swedish kronor ($562 million), and analysts polled
by FactSet had expected net profit of 4.9 billion kronor.
(END) Dow Jones Newswires
September 30, 2016 12:36 ET (16:36 GMT)
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