European stocks see worst week since June; DAX falls 1.5%

European stocks ended lower Friday, clocking their worst percentage drop since the middle of June, with banks leading the declines following news of a proposed $14 billion settlement for Deutsche Bank.

The pan-European Stoxx 600 index finished 0.8 percent lower provisionally, with the German Dax down 1.5 percent at the close. Shares of Deutsche Bank slid 8.5 percent – making it the worst performer on the Stoxx 600 index – after the U.S. Department of Justice asked the German lender to pay $14 billion to settle allegations of mis-selling mortgage securities.

“Given the very precarious finances of some European banks, of which Deutsche is one of the riskiest and systemically important, it’s disturbing and appears myopic and needlessly punitive,” Neil Wilson, a markets analyst at London spread better ETX Capital said on the DOJ’s fine.

The news hit other banking stocks which analysts say could face similar claims from the U.S.; RBS closed 4.5 percent lower, Commerzbank closed down 2.5 percent, Barclays down 2.5 percent and UBS was down 2.5 percent.

Fiat Chrysler shares slip

Carmaker Fiat Chrysler finished 2.2 percent lower following news that it was recalling 1.9 million cars worldwide for an air bag defect, Reuters reported.

In other news, the Central Bank of Russia cut its key interest rate by 50 basis points to 10 percent on Friday, “given the inflation slowdown, in line with the forecast, decrease in inflation expectations and unstable economic activity,” the central bank said.

Fed jitters remain

Meanwhile, the U.S. Federal Reserve continues to dominate market sentiment. The central bank’s policy makers are meeting on September 20, although the chances of a rate hike are slim following a deluge of disappointing U.S. data on Thursday. In the U.S. on Friday, stocks traded mostly lower as investors digested key inflation data.

Source: CNBC