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* Henderson/Janus deal lifts shares of fund managers
* FTSE touches 16-month high as sterling drops
* German DAX market closed for public holiday
* Bank software deal sends Temenos to all-time high
By Sudip Kar-Gupta and Danilo Masoni
LONDON/MILAN, Oct 3 European stock markets made
minor gains on Monday as a rise in the shares of fund management
companies in the wake of a large merger in the sector propped up
Nevertheless, lingering concerns over Deutsche Bank
still weighed on the minds of some investors.
The pan-European STOXX 600 index ended up 0.1
percent, although the index remained down by around 6 percent
since the start of 2016.
Britain's FTSE 100 rose 1.2 percent to a 16-month
high, helped by a drop in sterling, as a weaker pound typically
benefits the FTSE's export-driven, internationally focused
companies. The currency slid towards a three-decade low after
Prime Minister Theresa May set a March deadline for the formal
process of departure from the European Union to begin.
Shares in fund management companies rose after Britain's
Henderson Global Investors agreed to an all-share $6
billion merger with Janus Capital.
Henderson shares surged 16.7 percent, while rivals such as
Aberdeen Asset Management, Jupiter and Schroders
rose 5 percent, 6 percent and 2.7 percent respectively.
"Given the increased scale, this deal may kick off a round
of merger speculation involving other asset managers such as
Jupiter," Cantor Fitzgerald analyst Keith Baird said.
Although Deutsche Bank's main German-listed shares were not
trading due to a public holiday, its U.S.-listed shares fell 2.2
percent with the company's woes remaining at the forefront for
Deutsche Bank is throwing its energies into reaching a
settlement before next month's presidential election with U.S.
authorities demanding a fine of up to $14 billion for
mis-selling mortgage-backed securities.
City of London Markets Limited trader Markus Huber said some
traders were encouraged by signs that Deutsche Bank - whose
shares closed up 6.4 percent in Frankfurt on Friday - could
agree on a fine far less than $14 billion.
Analysts at JP Morgan and Morgan Stanley have forecast
Deutsche could settle the case for $5.4-$6 billions.
However, other traders said Deutsche shares would remain
under pressure while there was no deal. Deutsche Bank is still
down around 50 percent since the start of 2016 while the STOXX
Europe 600 bank index is down 20 percent.
"The European banking system is clearly going through tough
times, with high levels of non-performing loans, squeezed
margins due to negative interest rates, tougher regulations,
weak economic growth and competition with the fintech industry
booming," said FXTM chief market strategist Hussein Sayed.
Among the biggest losers in the sector on Monday were
Italy's Intesa Sanpaolo and UniCredit, both
down around 2 percent.
Shares in Temenos, a Swiss firm which sells
software for financial services, soared 10 percent to a record
high after the company said it had received an order from a
major European bank.
(Editing by Mark Heinrich)