Deutsche Bank Hauls Market Back Up as Report Says Close to Settlement with Department of Justice

European markets were mixed on Friday, as London and Madrid closed down, while German and French investors took heart from a report that beleaguered Frankfurt lender Deutsche Bank (DB) is close to reaching a $5.4 billion agreement with the U.S. Department of Justice to settle charges over its sale of mortgage-backed securities ahead of the financial crisis.

The French news agency AFP reported, citing a person familiar with the matter, that an agreement could be reached within a couple of days. Although the final amount of settlement could also be slightly different, it sends a signal that a deal would be reached at substantially less than half the $14 billion initial demand from the DoJ, which has sent the German lender's share price into tailspin over the past few days.

The reported settlement would coincide neatly with the amount that Deutsche Bank has set aside for litigation.

Deutsche Bank declined to comment on the report.

Nevertheless, Deutsche Bank's share bounced up from an all-time low of €9.9 ($11.12) in early trading this morning to hit a high for the day at €11.72. It closed at €11.51, up 12.24% from Thursday's closing price of €10.25.

The FTSE100 closed down 0.29% at 6,899.33 while in Frankfurt the DAX finished the day up 1.01% at 10,511.02 and the CAC40 ended up 0.10% at 4,448.26. In Madrid, the IBEX35 was off 0.19% at 8,779.40

German car-maker BMW (BMWYY) drove up 2.53% to €74.59, after CEO Harald Krueger told Bloomberg of plans to roll out the first battery-powered model of its urban Mini brand in 2019, followed a battery-powered version of the BMW X3 sport utility vehicle.

Spanish telco Telefonica (TEF) was off 4.04% at €9.02 after pulling the IPO of its infrastructure unit Telxius Telecom because of weak investor demand.

In other news, euro area inflation was forecast to be up 0.4% in September on an annual basis, according to the latest flash estimate from European Union's statistical agency Eurostat. That's up from 0.2% in August. Eurostat said services sector inflation is estimated to be up 1.2% year-on-year, compared with 1.1% in August, while food, alcohol and tobacco are set to rise just 0.7% over the year, compared with last month's much higher rate of 1.3%.

However, it is the ever-volatile energy sector that weighs most heavily on the index, with energy estimated down 3.0% year-on-year, compared with August's annual fall of 5.6%.

Befitting the Eurostat energy prediction oil markets were mixed, with West Texas Intermediate Crude recently up 0.54% at $48.09, while Brent Crude was down 0.61% at $8.94.

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