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Banks: Barclays shares fell 0.8% as the bank said it will fight a civil suit filed against it by the Department of Justice. The DOJ filed a suit on Thursday against the lender and several of its US affiliates. It’s alleging that Barclays engaged in a fraudulent scheme from 2005 to 2007 to sell securities backed by residential mortgage loans that it knew were likely to fail, all while telling investors that the mortgages backing the securities were sound.
“Barclays rejects the claims made in the complaint. Barclays considers that the claims made in the complaint are disconnected from the facts,” the bank said in a statement. “Barclays will vigorously defend the complaint and seek its dismissal at the earliest opportunity.”
Shares of Royal Bank of Scotland topped the FTSE 100, rising 2.2%. The bank hasn’t come to a conclusion with US authorities on its alleged misselling of mortgage bonds. But German lender Deutsche Bank late Thursday agreed to a $ 7.2 billion settlement of mortgage-backed securities claims with the US Justice Department. That’s less than the $ 14 billion US authorities had initially sought.
Those share moves suggest investors aren’t panicking over the DOJ action, said Mike van Dulken, head of research at Accendo Markets. In his view, the “standout performer” is RBS, which is yet to be mentioned by the US. regulator, even though the Scottish bank is likely to face a $ 12 billion fine for its own mortgage-backed securities selling.
“Its shares are +1.8% on a combination of optimism that it too could settle for half, like Deutsche, although gains may be capped by the prospect of the DoJ taking a dislike to Barclays pushing its luck and decides to make life difficult for the UK duo,” van Dulken said.
Other movers: Unilever was up 0.6%. Goldman Sachs has raised its 12-month price target to 36 euros ($ 37.60) from €35.50 on the company behind Dove soap, Ben & Jerry’s ice cream and other consumer-product brands.
Economic docket: The final reading on third-quarter UK gross domestic product is due at 9:30 am London time, or 4:40 am Eastern Time from the Office for National Statistics.
The pound was buying $ 1.2282, down from $ 1.2290 late Wednesday in New York. Sterling fell below $ 1.2300 on Thursday for the first time since early November.
This article was first published by MarketWatch