LONDON MARKETS: FTSE 100 Drops As Deutsche Bank Fine Takes A Toll On Other Lenders

By Carla Mozee, MarketWatch

Unilever in talks to buy company co-founded by actress Jessica Alba

Stocks in the U.K. fell Friday, with investors spooked by the prospect that banks will be pushed for hefty settlement payouts after news of a multibillion-dollar Deutsche Bank fine.

The FTSE 100 lost 0.3% to 6,712.98, with only the heath care group posting a modest gain. The London benchmark is on track for a 0.9% decline for the week, after a 1.7% fall for the week before.

Financials were leading the way lower after news late Thursday the U.S. Department of Justice has asked Deutsche Bank AG (DBK.XE) (DBK.XE) to pay $14 billion to settle civil claims related to mortgage-backed securities.

The "number is nearly fourfold higher what analysts were anticipating," said Naeem Aslam, chief market analyst at Think Markets UK, in a note.

Deutsche Bank said in a statement (https://www.db.com/newsroom_news/2016/medien/deutsche-bank-confirms-negotiations-with-doj-regarding-rmbs-en-11684.htm) that it doesn't intend to pay that amount and that it views the proposed settlement as the starting point for negotiations with the Justice Department.

Bank fears spread: In London, shares of Royal Bank of Scotland PLC (RBS.LN) (RBS.LN) fell 4.1% and Barclays (BCS) (BCS) dropped 2.1%. Those lenders are currently in talks with the Justice Department.

"Our concern is that this could be just a start, and other European banks could face a similar fate, and this why investors are leaving the boat with respect to the banking sector," said Aslam.

"If the Department of Justice will negotiate the number, that is a different question," he added.

Other bank shares were trading lower, with Standard Chartered PLC (STAN.LN) off 2.7%, HSBC PLC (HSBA.LN) (HSBA.LN) down 0.7%, and Lloyds Banking Group PLC(LLOY.LN)(LLOY.LN) moving down more modestly, by 0.3%.

Other movers: Unilever PLC (ULVR.LN) shares were off 0.4%. The maker of Dove soap is in talks to acquire Honest Co (http://www.marketwatch.com/story/unilever-looking-to-buy-jessica-albas-honest-co-2016-09-15)., the consumer-products retailer co-founded by actress Jessica Alba, according to The Wall Street Journal. The deal could be valued at more than $1 billion.

The pound was buying $1.3207, down from $1.3241 late Thursday in New York.

(END) Dow Jones Newswires

September 16, 2016 05:00 ET (09:00 GMT)

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