FTSE 100 dragged down as bank stocks suffer
The FTSE 100 was dragged lower by bank stocks on Friday as news of a major 14 billion US dollars (£10.5 billion) fine for Deutsche Bank sent jitters across the banking industry.
The UK's top tier index closed lower by 0.3% or 20 points at 6710.3 points.
On the currency markets, the pound sunk more than 1.15% against a surging US dollar to trade near 1.309, as better-than-expected US inflation figures drove the greenback higher.
Sterling fell 0.4% against the euro to 1.173.
European banking shares plummeted after the US Department of Justice (DoJ) slapped Deutsche Bank with a hefty settlement proposal worth £10.5 billion.
It follows a probe into the German lender's sale of mortgage-backed securities during the financial crisis.
The news spooked investors, who took flight from banking stocks amid concerns over the regulatory risk for the sector.
Neil Wilson, market analyst at ETX Capital, said the DoJ's settlement proposal posed "serious implications" for Royal Bank of Scotland, which may face its own settlement proposal.
He said: "RBS could have to pay up to 13 billion US dollars (£9.8 billion) to settle the claims. Even a third of this figure would deliver a crippling blow to the lender, making its return to profitability even further off. It would also derail plans to return the bank to private ownership any time soon."
UK lenders took a hit following the news, with RBS down 8.6p to 185.6p, Barclays down 4.8p to 164.7p, and Standard Chartered down 17.1p to 607.1p.
Across Europe, the German Dax closed down 1.5% while the French Cac 40 finished lower by 0.9%.
In oil markets, Brent crude prices slumped 1% to around 45.89 US dollars per barrel, hovering near one-month lows.
It comes after a week of bearish commodity reports from the likes of the International Energy Agency, and news of larger-than-expected US crude stockpiles.
Healthcare stocks made gains amid reports that Mediclinic was preparing to make an offer for the remainder of private healthcare company Spire.
Spire shares, which are listed on the FTSE 250, rose 29.1p to 390p on the back of the news.
It also drove FTSE 100-listed stocks higher, including AstraZeneca up 101p to 5095p and Shire up 159p to 5095p.
Away from the top tier index, logistics group John Menzies closed 26p higher at 618p after securing a 202 million US dollar (£153 million) deal to buy plane refuelling specialist ASIG.
The Edinburgh-based firm said the tie-up will double the size of its North American aviation arm and create one of the largest airport services companies in the world.
The biggest risers on the FTSE 100 were TUI up 40p to 1067p, Shire up 159p to 5095p, Burberry Group up 40p to 1301p, and AstraZeneca up 101p to 5095p.
The biggest fallers were Royal Bank of Scotland down 8.6p to 185.6p, Barclays down 4.8p to 164.7p, Standard Chartered down 17.1p to 607.1p, and ITV down 5.2p to 193.1p.