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European shares retreat as Deutsche Bank pulls lenders lower

Oct 10 2016 10:01
Alan Soughley and Camila Russo

Frankfurt - European shares fell for a fourth day as a decline in Deutsche Bank pulled a gauge of lenders to the worst performance of the 19 industry groups on the Stoxx Europe 600 Index.

Germany’s biggest bank fell 3.2% as people familiar with the matter said talks with the US Justice Department to resolve a probe into mortgage-backed securities are continuing, after Germany’s Bild newspaper reported that CEO John Cryan wasn’t able to reach an agreement at a meeting in Washington.

The Stoxx Europe 600 Index fell 0.2% to 338.98 at 09:23. European shares last week capped their fourth weekly decline in five, after a rally from a June low petered out in early September. Investors withdrew money from the region’s equity funds for a record 35th week as of October 5, a report from Bank of America Merrill Lynch showed on Friday.

Goldman Sachs has warned that political risks, exacerbated by a weak economy in Europe and high stock prices in the US, make European and US markets vulnerable to declines in the next three months. The firm projects that the S&P 500 Index and the Stoxx 600 will each drop by about 2% by December. 

UK shares bucked the trend today, advancing amid a weaker pound, with the FTSE 100 Index rising 0.2%. Miners led gains, with Randgold Resources and Fresnillo leading gains. 

Among other stocks moving on corporate news today, William Hill rose 5.1% after Canada’s Amaya said it is in talks on an all-stock merger with the UK bookmaker. Vivendi added 1.6% after Vincent Bollore’s investment company raised its stake in the French media conglomerate to more than 20%.

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