European stocks stable before Christmas, banks in focus

Europe's stock markets were stable Friday on the last trading day before Christmas, with banks topping the agenda after huge US fines and a bailout in Italy.

London was flat before an early finish at 1230 GMT, as upwardly revised data showed the British economy grew 0.6 percent in the third quarter despite Brexit jitters.

In the eurozone, Frankfurt and Paris both eked out slender gains, but Milan jumped 0.9 percent on relief over a state rescue of the Monte dei Paschi di Siena (BMPS) bank.

"It is quite a shaky year-end for the European financials," observed analyst Ipek Ozkardeskaya at London Capital Group.

"Investors are relieved amid Monte dei Paschi's rescue, and Credit Suisse (and) Deutsche Bank's agreements with the US Department of Justice (DoJ)."

Deutsche Bank and Credit Suisse have agreed to pay a total of almost $12.5 billion to settle disputes over the sale of mortgage-backed securities during the global financial crisis.

Germany's biggest lender has reached a $7.2-billion deal to settle a case with the DoJ over its role in the subprime mortgage crisis. Credit Suisse agreed to pay nearly $5.3 billion.

The DoJ said Thursday that it was suing Barclays, accusing the British bank of massive fraud in the sale of mortgage-backed securities which contributed to the 2008 crisis.

Barclays rejects the claims and says it will "vigorously defend" itself.

- 'Mixed day' for banks -

"It's a mixed day for banks, with Deutsche Bank and Credit Suisse both up after fines from the US Department of Justice came in lower than feared... and Italy's Monte dei Paschi di Siena's shares suspended after the inevitable admission that is does indeed require state aid," said Russ Mould, investment director at stockbroker AJ Bell.

"The US DoJ had initially pressed for a $14 billion fine on Deutsche Bank for alleged mis-selling of mortgage backed-securities at the height of the housing bubble in the middle of the last decade, so the market is seeing the eventual $7.2 billion penalty as a bit of a result for the German lender," he said.

"Shareholders in Credit Suisse are clearly similarly relieved, while it is possible that investors in Barclays are talking the view that any settlement may not be as punitive as feared."

In Frankfurt, Deutsche Bank shares gained 2.82 percent to 18.25 euros. 

In Zurich, Credit Suisse initially bounced more than two percent higher before sliding into negative territory, down 0.72 percent at 15.22 Swiss francs.

Back in London, Barclays' share price sank 1.48 percent to 223.65 pence.

Barclays was one of several major banks implicated in the crisis that so far have not reached settlements with US authorities over their roles in the financial meltdown.

- Italian rescue plan -

Meanwhile in Italy, the government approved a bailout plan in the early hours of Friday to rescue the country's struggling banks, with BMPS likely the first in line.

The announcement by Prime Minister Paolo Gentiloni comes after BMPS -- the world's oldest bank -- said it had failed to raise five billion euros ($5.2 billion) from the markets to shore up its capital.

The plan approved at a late-night cabinet meeting taps into the package of up to 20 billion euros approved by parliament on Wednesday.

"Banks may also be getting a lift from the 20-billion-euro bailout plan for Italy's ailing banking sector but there remains the risk that such hopes proves misplaced," cautioned Mould at AJ Bell, adding that some lenders remain dogged by liquidity and profitability problems.

- Key figures around 1030 GMT -

London - FTSE 100: FLAT at 7,060.70

Frankfurt - DAX 30: UP 0.1 percent at 11,470

Paris - CAC 40: UP 0.1 percent at 4,839.70

Milan - FTSE MIB: UP 0.9 percent at 19,295

EURO STOXX 50: UP 0.2 percent at 3,276.50

Tokyo - Nikkei 225: Closed 

Hong Kong - Hang Seng: DOWN 0.28 percent at 21,574.76 (close) 

Shanghai - Composite: DOWN 0.94 percent at 3,110.15 (close)

New York - Dow: DOWN 0.1 percent at 19,918.88 (close)

Euro/dollar: UP at $1.0455 from $1.0438

Dollar/yen: DOWN at 117.32 yen from 117.56 yen 

Pound/dollar: DOWN at $1.2275 from $1.2388

Oil - West Texas Intermediate: DOWN 33 cents at $52.62 per barrel

Oil - Brent North Sea: DOWN 28 cents at $54.77