Europe Lenders Rise With Deutsche Bank to End Week of Stock Woesby and
German bank surges on report of lower U.S. settlement
Stoxx 600 closes little changed, erasing earlier drop
Shares of European lenders rose on the final day of a troubled week, erasing declines after Deutsche Bank AG swung to gains amid easing investor concern about its financial health.
The Stoxx 600 Banks Index advanced 0.6 percent at the close, reversing an earlier slide of 3.8 percent. Deutsche Bank erased a drop of as much 9 percent to rise 6.4 percent after a report it’s nearing a $5.4 billion settlement with the U.S. Department of Justice, less than half an initial request. The lender, which tumbled on Monday amid concerns about its capital buffers, fell anew earlier today after a report that hedge funds moved to cut their exposure to it.
“There may be speculation about the fine,” said Michael Woischneck, who manages about $180 million as senior equities manager at Lampe Asset Management in Dusseldorf, Germany. “It’s the last trading day of the third quarter and for a lot of mutual funds it’s even the end of their fiscal year -- Deutsche Bank is in a lot of those, and they don’t want the stock trading in single digits, so they may be buying. All of the problems that were there this morning are still there and will still be there next week.”
It’s been a rough week for European lenders, with worries about Deutsche Bank followed by job cuts at Commerzbank, a $1.1 billion lawsuit settlement for Royal Bank of Scotland Group Plc and prospects of cost reductions at Credit Suisse Group AG. The Swiss lender has fallen 3.2 percent this week, while Commerzbank is down 9 percent, the biggest drop among peers.
The broader Stoxx Europe 600 Index closed less than 0.1 percent higher on Friday, erasing a drop of as much as 1.7 percent as Deutsche Bank rose from an intraday record-low price of 9.90 euros. The 1.81 euro fluctuation in its shares was the biggest since August 2011, relative to its closing price.
More than two-thirds of lenders in the Stoxx 600 rose, with Italy’s Banco Popolare SC and Spain’s Bankia SA reversing losses to rise at least 2.2 percent. Commerzbank slid 1.2 percent to its lowest price in more than a month. Still, the gains weren’t enough to overcome recent losses. The banking index has fallen 1 percent this week and is down 2.7 percent in September, as a rebound from a four-year low in July ran out of steam. That soured its best quarterly advance since March 2015.
Among other shares active on corporate news today, Telefonica SA lost 4 percent after canceling an initial public offering of its infrastructure unit Telxius Telecom SA, amid tepid investor demand. Hennes & Mauritz AB fell 2.9 percent after the fashion retailer reported worse-than-estimated revenue growth in September AG and said a weak start to the autumn season raises the risk of higher discounting in the fourth quarter.
A gauge of euro-area swings advanced 17 percent this week, the most in more than a month. The Stoxx 600 fell 0.7 percent in the period, trimming its first quarterly gain of the year to 4 percent.