European stocks end slightly higher; Deutsche Bank spikes off record lows

European stocks came off their session lows in afternoon trade on Friday to trade 0.1 percent higher but concerns over the systemic risk posed by German banks continued to weigh on investor sentiment.

The pan-European STOXX 600 recovered some of its losses to close 0.11 percent up.

Europe followed the trend set by Asia on Friday, where markets were lower across the board on the final trading day of the quarter, after concerns over Deutsche Bank’s stability drove down sentiment in U.S. markets Thursday.

Concerns over Deutsche Bank sent its U.S.-listed shares to an all-time low on Thursday and weighed on the broader financial sector. In Europe, shares of the German lender tanked as much as 8.6 percent off on Friday, before recovering all of the previous day’s losses to close 6.4 percent higher on unconfirmed reports that it had reached a deal with the U.S. Department of Justice over its settlement.

Worries over Deutsche Bank had dragged the whole banking sector lower, with Italian lenders near the bottom of the pack, but it bounced back to close 0.6 percent.

On Thursday, Commerzbank said it was cutting thousands of jobs and on Friday, HSBC cut its price target for the stock, sending shares in the bank 1.15 percent lower.

In the U.S., shares opened in positive territory, with the Dow Jones Industrial Average up 0.6 percent and the broader S&P500 up 0.5 percent.

Telefonica delays Telxius IPO

In other individual stock news, Telefonica shares fell after it said it had cancelled the planned listing of its Telxius business due to weak investor demand.

France’s AXA and Germany’s Allianz have moved on to the next stage of talks regarding a deal with Standard Chartered that would allow the insurance firms to sell their products through the bank’s Asian branches, Reuters reported, citing sources. Shares in AXA and Allianz were lower as part of a broader sell-off in the insurance sector.

Burberry was one of the bright spots in Europe, with shares mildly higher after RBC raised its price target on the stock.

On the data front, a flash estimate of euro zone inflation in August showed a tick up of 0.4 percent year-on-year, in line with consensus. Unemployment in the euro zone held steady at 10.1 percent in August, the same as in July.

In the U.K., second-quarter gross domestic product (GDP) figures were revised up to show economic growth of 0.7 percent, from the 0.6 percent previously thought.

Source: CNBC