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Europe: Shares steady; Deutsche rises on US mortgage fraud deal

Saturday, December 24, 2016 - 07:03

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[LONDON] European shares were steady on Friday with the focus on lenders after Deutsche Bank and Credit Suisse settled mortgage securities fraud suits in the United States, and Italy's Monte dei Paschi agreed to a bailout.

The STOXX Europe 600 was flat at its close and unchanged for the week, but the index still on track for its best month since October 2015.

Deutsche Bank trimmed early gains to end 0.3 per cent higher, outperforming a slightly negative European banking index , after it agreed to a US$7.2 billion settlement with the US Department of Justice (DoJ) over its sale of toxic mortgage securities before the 2008 financial crisis.

US authorities had been seeking nearly twice as much.

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Deutsche's shares have risen nearly 80 per cent since touching record lows in September.

Credit Suisse turned negative after early gains, while RBS , which is also being investigated, rose 1.4 per cent on hopes that its final settlement might be lower than expected.

However, Barclays underperformed after failing to reach a settlement. It was down 0.9 per cent after the DoJ launched a lawsuit against the bank over its sale of mortgage-backed securities. The bank said it rejected the complaint. "(Gains for) Deutsche Bank shares suggests relief at a good result and the affair being closed," Accendo Markets head of research Mike van Dulken said in a note. "Barclays' (fall) indicates some uncertainty about what it eventually ends up paying." Britain's FTSE 100 closed 0.1 per cent higher.

Italian lenders rose 0.6 per cent after the Italian government agreed to bail out Monte dei Paschi. The bank's shares will remain suspended until the conditions of a state bailout become clear.

Shares in Telecom Italia rose 4.5 per cent after a report that Italy was considering a plan for its state lender to buy a stake in the telecoms company to counter the ambitions of French businessman Vincent Bollore.

Dutch insurer NN Group rose 3.7 per cent after it reached an agreement to buy Delta Lloyd. NN had nudged up its unsolicited offer by 1.9 per cent to 2.5 billion euros.

NN Group said the deal would cement its leading position in life insurance in the Netherlands, increase assets under management by 60 billion euros, and lead to "double-digit"dividend increases starting in 2018.

Advertising firm JCDecaux rose 3.4 per cent on its merger of activities with Top Media, strengthening its presence in Panama, Guatemala, Costa Rica and El Salvador.

REUTERS

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