London (AFP) – European stock markets retreated on Friday, as banking shares led by Deutsche Bank slumped on news US authorities were hunting down Germany’s biggest lender over a record fine.
Frankfurt’s DAX 30 was the hardest hit, closing down 1.5 percent, while the Paris CAC 40 shed nearly 1.0 percent compared with the close on Thursday.
London’s benchmark FTSE 100 index ended the week slipping 0.3 percent.
The US Justice Department is seeking up to $14 billion (12.5 billion euros) from Deutsche Bank to resolve allegations stemming from the sale of mortgage securities in the 2008 crisis, the German financial giant confirmed.
It added that the DoJ had invited the bank to submit a counter offer, and said it expected to reach a “materially lower” figure in negotiations.
But the news hammered Deutsche Bank shares, which sank 8.5 percent to close at 11.99 euros in Frankfurt.
The US action was also felt across Europe’s banking sector, with shares in Royal Bank of Scotland in London shedding 4.4 percent to 185.6 pence, and in Paris, French lender Societe Generale slid 2.7 percent to 31.1 euros.
The pursuit of Deutsche “has understandably sent ripples across the sector pool, especially UK-based RBS which awaits its own bad news from across the pond,” said Mike van Dulken, head of research at Accendo Markets.
On the other side of the Atlantic Friday US stocks also lost ground on weakness in bank as well as petroleum-linked equities affected by a retreat in oil prices.
Around mid-day in New York, the Dow Jones Industrial Average was down 0.45 percent, the broad-based S&P 500 fell 0.5 percent and the tech-rich Nasdaq Composite Index slipped 0.3 percent.
And US shares of Deutsche Bank plunged 9.2 percent, while large US banks also saw their share price hit, with Dow members Goldman Sachs and Citigroup losing nearly 1.0 percent.
– Fed set to hold rate –
Asian stock markets meanwhile rallied Friday on doused expectations of a Federal Reserve interest rate hike next week after another round of below-par US data.
Equities globally have suffered during a volatile week as top Fed officials gave conflicting views on the need for tighter monetary policy, fuelling uncertainty across trading floors.
But the chances of a move at the Fed policy meeting were diminished Thursday with the release of lacklustre US retail sales figures as well as weak readings on industrial output and wholesale inflation.
In Asia, where trade was thin due to public holidays,Tokyo ended 0.7 percent higher, while Sydney jumped one percent, Singapore also added 0.7 percent and Wellington climbed 0.8 percent.
Shanghai, Hong Kong, Seoul, Kuala Lumpur and Taipei were shut.
“With nothing in the economic numbers to say US rates should be moving up, and growing signs of losing momentum, expectations have largely diminished toward the Fed doing anything in September,” said ANZ Bank New Zealand chief economist Cameron Bagrie.
“The market is drifting back toward the view they might do nothing for quite a while,” he wrote in a note.
Also on traders’ radar next week will be the Bank of Japan’s own gathering after reports that it is planning to cut interest rates further into negative territory.
– Key figures around 1545 GMT –
London – FTSE 100: DOWN 0.3 percent at 6,710.28 (close)
Frankfurt – DAX 30: DOWN 1.5 percent at 10,276.17 (close)
Paris – CAC 40: DOWN 0.9 percent at 4,332.45 (close)
EURO STOXX 50: DOWN 1.3 percent at 2,935.93
Tokyo – Nikkei 225: UP 0.7 percent at 16,519.29 (close)
Shanghai – Composite: Closed for public holiday
New York – DOW: DOWN 0.45 percent at 18,130.30
Euro/dollar: DOWN at $1.1163 from $1.1244 late Thursday
Pound/dollar: DOWN at $1.3084 from $1.3240
Dollar/yen: UP at 102.22 yen from 102.10 yen
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