By Jonathan Stempel
NEW YORK, Aug 20 (Reuters) - Barclays Plc shareholders who accused the British bank in a lawsuit ofinflating its stock price by manipulating the interest rateknown as Libor may pursue their case as a class action, a U.S.judge ruled on Thursday.
U.S. District Judge Shira Scheindlin in Manhattan, whose May2013 dismissal of the case was overturned by an appeals court,said the claims were similar enough to justify letting theshareholders sue as a group.
She nonetheless said in a 77-page decision that theshareholders face "significant obstacles" to proving damages,including over whether any stock price inflation had dissipatedonce Barclays started reporting Libor accurately.
Class actions make it easier for plaintiffs to recoverlarger sums at lower costs than if they sue individually.
Barclays spokesman Marc Hazelton declined to comment.
Shareholders led by Carpenters Pension Trust Fund of St.Louis and the St. Clair Shores Police & Fire Retirement Systemin Michigan accused Barclays of inflating the price of itsAmerican depositary shares from July 10, 2007 to June 27, 2012.
The class period ended on the day Barclays agreed to payroughly $453 million of fines in settlements with U.S. andBritish regulators, and admitted to artificially depressingLibor submissions from August 2007 to January 2009. Barclays'ADS price fell 12 percent the next day.
Shareholders said the depressed Libor submissions causedBarclays to understate its borrowing costs.
They also said defendant Robert Diamond, then Barclays'president and later its chief executive, deceived them on anOct. 31, 2008 conference call by denying that Barclays'borrowing costs were higher than those of rivals, and saying:"We're categorically not paying higher rates in any currency."
Libor underpins hundreds of trillions of dollars oftransactions, and is used to set rates on credit cards, studentloans and mortgages.
"We're very pleased that the judge is allowing us to moveforward," said David Rosenfeld, a partner at Robbins GellerRudman & Dowd representing the lead plaintiffs.
Several other banks have also settled with U.S. and Europeanregulators over alleged Libor manipulation.
The case is Carpenters Pension Trust Fund of St Louis et alv. Barclays Plc et al, U.S. District Court, Southern District ofNew York, No. 12-05329. (Reporting by Jonathan Stempel in New York; Editing byChristian Plumb)