Published: Sun, October 02, 2016
Economy | By Melissa Porter

Markets Right Now: Bank stocks lead a rebound on Wall Street

The Dow Jones Industrial Average climbed 164.70 points, or 0.9%, to finish at 18,308.15. That almost erased its 195-point loss from a day before. The Nasdaq composite climbed 42 points, or 0.8 percent, to 5,312.

The shares also tumbled as the Frankfurt stock market opened Friday, falling by more than nine percent at one point, hitting a historic low of 9.90 euros.

"(A fine of) $14 billion basically wipes out their earnings for the year", said Nathan Thooft, head of global asset allocation for Manulife Asset Management.

Yet new European rules on bank bailouts could limit the government's choices and expose investors to losses.

Deutsche Bank came under pressure after the U.S. Department of Justice this month requested $14 billion to settle an investigation, and some funds shifted part of their listed derivatives holdings to other firms, according to an internal bank document seen by Bloomberg News. Germany's largest lender had said it would fight a $14 billion demand from the U.S. Department of Justice.

Shares in troubled German lender Deutsche Bank soared by around 6 percent in the final minutes of trading on Friday, rebounding from a plunge to historic lows earlier in the day.

The stock initially opened 8% lower amid new fears about its funding - with a potential $14bn (£10.8bn) settlement for its activities in the USA before the financial crisis also looming large in investors' minds.

Deutsche Bank (DB) made a big comeback on Friday, while crude oil added to its recent rally, leading Wall Street to clock substantial gains to end the week.

Also, the European Central Bank can make available big, ultra-cheap, short-term loans for banks if the system as a whole gets into trouble. Google FinanceIn US economic data released earlier, personal income rose in line with expectations, by 0.2%, while spending flatlined during August. Brent crude, the worldwide benchmark, picked up 29 cents to $50.10 a barrel in London. On the Nasdaq, 1,497 issues rose and 744 fell.

Spot gold was down 0.3% at $1,316.32 per ounce by 2.48pm EDT (1848 GMT). Natural gas slipped 5 cents to $2.91 per 1,000 cubic feet.

The unease spread into currency markets, with high-yielding - riskier - units fell against the dollar as dealers looked for safety. Commerzbank was down 6 percent, Italy's UniCredit 4.4 percent and Spain-based Banco Santander 3.7 percent.

Major stock indexes set records this quarter thanks mostly to tech stocks. Apple surged 18 percent, partly on indications of strong sales for the newest iPhones.

Bond prices sank. The yield on the 10-year Treasury note rose to 1.60% from 1.56%. Earlier in the day losses reached more than 8%, taking the stock to a new low. Copper gained 2 cents to $2.21 a pound.

"At no time in the last two decades has Deutsche Bank been as safe as it is today", Cryan wrote in a memo to his staff, pointing to the bank's 215 billion euros ($241 billion) in liquidity reserves, ongoing restructuring and a 1.0-billion-euro operating profit in the first half.

The FTSE 100 also clawed back lost ground.

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