European stocks closed with minor gains Friday, with the banking sector again in focus after settlements with U.S. regulators, as the Italian government prepared a bailout for troubled lender Monte dei Paschi di Siena SpA.
The Stoxx Europe 600 index SXXP, +0.04% closed up less than 1 point at 359.97 as basic materials, financial and consumer issues fell. But advancers were led by technology, utility and telecom shares. The benchmark on Thursday fell 0.2%.
The pan-European index finished fractionally lower for the week, during which the market saw lower trading volume as investors prepared for the Christmas holiday.
DOJ settles with banks: Deutsche Bank AG shares DBK, +0.16% DBK, +0.34% finished up 0.3%, but well off session highs, after the German lender late Thursday agreed to a $ 7.2 billion settlement of mortgage-backed securities claims with the U.S. Justice Department. That’s less than the $ 14 billion U.S. authorities had initially sought.
Meanwhile, Credit Suisse AG shares CSGN, -0.91% CS, -0.94% swung down 0.9% as the Swiss lender reached a $ 5.2 billon settlement with the DOJ over its selling of mortgage-backed securities before the financial crisis. Credit Suisse will take a $ 2 billion charge to its results in the current quarter.
“There is finally some good news for European banking sector,” said Naeem Aslam, chief market analyst at ThinkMarkets UK, in a note. “The amount of $ 14 billion which was initially expected by Deutsche could have put the bank under a lot of strain. Its stock plummeted as the bank waited for a result, as traders were not confident about the bank’s ability to carve out a deal.”
Elsewhere in the sector, Barclays PLC BARC, -0.90% BCS, -0.38% shares lost 0.9% after the British bank said it would fight a civil suit filed by the Department of Justice alleging mortgage-backed securities fraud.
BMPS heads for bailout: Meanwhile, the FTSE Italia All-Share Bank Index IT8300, +0.64% climbed 0.6% as the Italian government reportedly prepared a bailout of struggling Banca Monte dei Paschi di Siena BMPS, -7.48% . The world’s oldest lender said Thursday it failed to raise €5 billion to recapitalize. The bank’s shares were suspended for trading on Friday by the Italian market regulator.
The Italian government on Friday approved a €20 billion fund to aid the country’s troubled banks, paving the way for the government to rescue Banca Monte dei Paschi, which has struggled with a hefty debt load.
Other Italian bank stocks rose. Mediobanca SpA MB, +1.28% and Banca Popolare di Milano PMI, +1.27% each added 1.3% and Intesa Sanpaolo SpA ISP, +1.23% gained 1.2%. But UniCredit SpA UCG, -0.56% turned lower to close down 0.6%.
Other movers: Vivendi SA shares VIV, -0.70% reversed course and fell 0.7%. The French group said it now has a 28.8% stake in Italian broadcaster Mediaset SpA MS, +0.25% despite ongoing legal battles between the companies. Vivendi is aiming to build a 30% stake, the legal threshold after which an investor is required to launch a takeover offer. Mediaset shares moved up 0.3%.
Economic docket: The French economy grew 0.2% quarter-on-quarter in the third quarter, statistics agency Insee said Friday, confirming an earlier reading.
The U.K. economy grew faster than previously thought in the three months following June’s vote to leave the European Union. The growth rate was moved up to 0.6% compared with a previous estimate of 0.5%.
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