European Markets Dropped After Deutsche Bank Fine Sparks Panic

(RTTNews) - The European markets ended Friday's session firmly in negative territory. Bank stocks were under extreme pressure at the end of the trading week due to concerns over Deutsche Bank. The U.S. Department of Justice has fined the German lender $14 billion to settle claims over a mortgage securities probe. Deutsche has set aside just $5.5 billion to resolve legal issues.

The sheer size of the fine caused traders to flee bank stocks, since there are other European banks that are facing similar probes. Energy stocks also turned in a weak performance, as crude oil prices slipped beneath $43 a barrel.

Investors also remained in a cautious mood ahead of the Bank of Japan and Federal Reserve policy meetings next week. U.S. consumer prices climbed more-than-expected in August, which helped to renew hopes that the Federal Reserve is likely to tighten monetary policy in coming months.

The pan-European Stoxx Europe 600 index weakened by 0.65 percent. The Euro Stoxx 50 index of eurozone bluechip stocks decreased 1.30 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 0.82 percent.

The DAX of Germany dropped 1.49 percent and the CAC 40 of France fell 0.93 percent. The FTSE 100 of the U.K. declined 0.30 percent and the SMI of Switzerland finished lower by 0.66 percent.

In Frankfurt, Deutsche Bank plunged 8.47 percent. The lender said it has no intent to pay the $14 billion sought by the U.S. Department of Justice to settle civil claims over the bank's sale of residential mortgage-backed securities related to the 2008 financial crisis. The lender said it has "no intent to settle these potential civil claims anywhere near the number cited." Rival Commerzbank also dropped 2.03 percent.

Utility E.ON weakened by 4.03 percent and rival RWE fell 1.92 percent.

Volkswagen declined 3.68 percent and BMW lost 2.76 percent. Daimler also finished lower by 2.64 percent.

In Paris, Societe Generale decreased 2.73 percent and BNP Paribas surrendered 2.29 percent. Credit Agricole also forfeited 0.75 percent.

Peugeot dropped 1.62 percent and Renault fell 2.36 percent.

In London, Royal Bank of Scotland declined 4.43 percent and Barclays lost 2.83 percent. Standard Chartered also finished down by 2.74 percent.

Shares of SVG Capital climbed 3.23 percent. The private equity group said it believes the unsolicited final offer from HarbourVest BidCo undervalues the company and its assets.

Electra Partners jumped 2.65 percent after announcing the successful 266 million pounds initial public offering of its portfolio company Hollywood Bowl Group Plc., the U.K.'s largest ten-pin bowling operator.

Consumer goods giant Unilever finished lower by 0.85 percent on reports that it is in talks to buy Honest Co., the consumer-products retailer co-founded by actress Jessica Alba, in a deal valued at over $1 billion.

Eurozone hourly labor cost grew at a slower pace in the second quarter, Eurostat reported Friday. Hourly labor costs increased 1 percent year-on-year, slower than the 1.6 percent growth registered a quarter ago.

Consumer prices in the U.S. increased by slightly more than expected in the month of August, according to a report released by the Labor Department on Friday. The Labor Department said its consumer price index rose by 0.2 percent in August after coming in unchanged in July. Economists had expected prices to inch up by 0.1 percent.

With an improvement in consumer expectations offset by a deterioration in views of current economic conditions, the University of Michigan released a report on Friday showing that U.S. consumer sentiment has been unexpectedly flat in September.

The University of Michigan said the preliminary reading on its consumer sentiment index for September came in at 89.8, unchanged from the final August reading. Economists had expected the index to inch up to 90.8.