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New York / AFP
European stocks and Wall Street traded nearly flat in a quiet session before Christmas, with banks topping the agenda after huge US fines and a bailout in Italy.
London closed marginally higher in a half-day session, 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 hovered around either side of unchanged but Milan jumped, closing over one percent higher, on relief over a state rescue of the Monte dei Paschi di Siena (BMPS) bank.
US stocks finished modestly higher, with most pharma stocks rising. Still, the Dow came up short of 20,000 points, its latest failed push towards the landmark.
Analysts suspect the post-election rally may have run its course after Republican Donald Trump’s election to president boosted hopes of a pro-growth agenda from Washington.
“The market still believes Trump’s agenda will have positive effects, but it needs something concrete to go even further,” said Gregori Volokhine, president of Meeschaert Capital Markets.
Deutsche Bank and Credit Suisse 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 reached a $7.2-billion deal to settle a case with the US Department of Justice (DoJ) over its role in the subprime mortgage crisis. Credit Suisse agreed to pay nearly $5.3 billion.
US-traded shares of Deutsche Bank rose 0.5 percent, while Credit Suisse dipped 0.5 percent.
BMPS shares suspended
Meanwhile in Italy, the government approved a state-funded rescue of the world’s oldest bank, Monte dei Paschi di Siena (BMPS), in a bid to shore up the country’s beleaguered financial system.
The announcement by Prime Minister Paolo Gentiloni came after BMPS — 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 a package of up to 20 billion euros approved by parliament on Wednesday.
Whether markets regard BMPS as on the road to recovery will not be clear for some time, with the resumption of trading in its shares after the Christmas break set to provide the first test. But Friday’s overall mood on the Milan stock exchange was
upbeat, with the main index rising
1.2 percent.