Deutsche Bank is near an agreement with USA officials to pay $5.4 billion to settle charges over its sale of toxic mortgage bonds ahead of the financial crisis, a person familiar with the matter said Friday.
It has spent billions settling charges that it conspired to manipulate global interest rates and colluded with other banks to rig foreign exchange rates; its margins have disappeared due to record low interest rates and the cost of new regulations; and it has been slammed with a $14 billion demand from the U.S. Justice Department over its role in the global financial crisis.
The Dow Jones industrial average rose 164 points, or 0.9 percent, to 18,308.
Shares received another boost and closed up 6% after a report claimed that Deutsche Bank had reached a deal to settle legal claims in the US for a smaller amount than expected.
Financial stocks had tumbled Thursday afternoon as investors again anxious about the health of Deutsche Bank following reports that some hedge funds are moving their business out of the bank. The Nasdaq composite climbed 42 points, or 0.8 percent, to 5,312.
For the moment, the Deutsche Bank news is providing a bid to financials and the broader market, said Ryan Larson, head of equity trading at RBC Global Asset Management.
The bank says it is not seeking government help and has taken steps to sell a subsidiary.
The index had lost almost 1.5 percent on Thursday, sparked by declines in Deutsche Bank and Wells Fargo.
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Connor Campbell, financial analyst at SpreadEx, said: "After a couple of days of relief the markets are back in the red, with Deutsche Bank continuing to position itself as the number one worry for investors".
An AFP news agency report that the bank was nearing a cut-price settlement of $5.4 billion helped the euro recover after the currency fell to a nine-day low of $1.1153 around the start of the US trading session.
USA oil prices gained 0.9% to $48.24 a barrel following two days of gains after members of the Organization of the Petroleum Exporting Countries tentatively agreed to cut production.
The Japanese currency was still set to gain about 1.8 percent against the dollar for the quarter to notch its third straight quarterly gain.
The Dow rose 112 points, or 0.6 percent, to 18,255. NXP was up 6 percent.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.60 percent.
The S&P; 500 index showed 19 new 52-week highs and three new lows, while the Nasdaq recorded 54 new highs and 26 new lows.
Spain's 10-year bond yields fell 4 basis points to 0.88 percent.
