Barclays Share News (BARC)

LONDON (Alliance News) - Stock prices were mixed in London midday Friday, with banks weighing on the FTSE 100 index as the USD14 billion bill that Deutsche Bank received from the US Justice Department reawakened concern about regulatory risk for the sector.

The German bank said it will not pay the USD14 billion sought by the DOJ to settle an investigation into the company's sale of residential mortgage-backed securities.

"Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts," the company said.

Citing people familiar with the matter, the Wall Street Journal said that other banks remain under investigation as well and could face penalties, including Barclays and Royal Bank of Scotland.

Mike van Dulken, head of research at Accendo Markets, said that Deutsche's fine was weighing on the entire linked European banking sector.

"RBS is suffering most today because it remains in the firing line stateside for its own RMBS mis-selling and actions in the run-up to the financial crisis. However, it has yet to hear from the US Department of Justice (it's been more than two years)," van Dulken said.

RBS shares were down 4.4%, Standard Chartered down 3.1% and Barclays down 2.7%. In Frankfurt, shares in Deutsche Bank were down 7.9%.

London-listed banks also were suffering from the prospect of another cut to the UK base rate, following the reduction to 0.25% in August.

On Thursday, the Bank of England's Monetary Policy Committee said it will assess forthcoming economic indicators during its November forecast round. If the outlook of the UK economy is judged to be "broadly consistent" with the August projections, "a majority of members expect to support a further cut in Bank Rate to its effective lower bound at one of the MPC's forthcoming meetings during the course of this year".

Low interest rates puts pressure on bank lending margins.

The FTSE 100 index traded down 0.3%, or 18.70 points, at 6,711.60. The FTSE 250 was up 0.4% at 17,818.19 and the AIM All-Share was up 0.5% at 806.25.

There was increased volatility in stock markets on Friday because of "quadruple witching day". This is the expiry date of market index futures, market index options, stock options and stock futures.

In mainland Europe, the CAC 40 index in Paris and the DAX 30 in Frankfurt were both down 1.0%.

Futures indicated a lower open on Wall Street. The Dow Industrials and Nasdaq 100 were indicated to open down 0.4% and the S&P 500 index down 0.5%.

On the London Stock Exchange, Wm Morrison Supermarkets continued to be on the up after it was upgraded to Neutral from Underperform by Exane BNP and to Market-Perform from Underperform by Bernstein.

On Thursday, Morrisons beat analyst expectations, reporting its third consecutive quarter of like-for-like sales growth and a rise in profit in the first half of its financial year. The stock added 7.1% on Thursday and was up 2.0% on Friday.

In the FTSE 250, Acacia Mining was the worst performer, down 9.2%. The precious metals miner said it has been unable to run the processing plant consistently at the Bulyanhulu mine in Tanzania since it undertook a two-week shutdown in the third quarter to carry out planned maintenance work.

"The planned maintenance was concluded successfully, and we recommenced full-scale hoisting in early September; however we have not been able to run the plant consistently since the shutdown due to repeated overheating of the ball mill trunnion bearing," said Acacia.

Still, the company said it expects third-quarter production to be broadly in line with the first quarter, mainly thanks to a "strong performance" from the North Mara mine.

SVG Capital said Friday it has received approaches from several parties following a takeover bid by HarbourVest Structured Solutions III on Monday, as it reported double-digit net asset value growth in the first half of 2016.

SVG urged shareholders to take no action on HarbourVest's unsolicited bid, as the company said the approaches from credible parties may lead to a competing offer with superior value.

On Monday, HarbourVest confirmed that it made a final cash offer to acquire SVG at 650.00p per share, valuing SVG at GBP1.02 billion, and confirmed it had acquired an 8.5% stake in SVG. The stock was up 5.0% at 683.00p on Friday.

Intercede Group said trading for the year to date is below expectations, meaning revenue for the full year is now likely to be lower than the prior year.

The software and services company noted it has had a "slow start" to its current financial year, which began in April 1, amidst continuing delays in the receipt of anticipated licence orders for its MyID software system from both new and existing customers.

Shares in Intercede were down 35%, making it the worst performer in the AIM All-Share.

Still ahead in the economic calendar is the US consumer price index at 1330 BST and US consumer confidence at 1500 BST.

Craig Erlam, senior market analyst at Oanda, said disappointing US data on Thursday dealt a blow to prospects of a US interest rate hike in September, and Friday's data could bring into question whether the Federal Reserve will raise rates at all this year.

"A September hike has been all but written off by the markets, with the implied probability now down to only 12%, a level that the Fed will be very reluctant to act at on the fear of creating unnecessarily market turbulence," Erlam said.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

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