The largest German lender's stock fell to a record low on Friday on news that a number of hedge funds had pulled out collateral as the bank faces a $14 billion demand from US authorities for misselling mortgage-backed securities.USA stocks fell sharply on Thursday amid choppy trading as banks took a beating due to declines in Deutsche Bank and Wells Fargo, whose chief executive was rebuked by lawmakers over his handling of sales abuses.
They closed up 6.4 percent at 11.57 euros - a strong close after earlier in the day trading below 10 euros for the first time ever.
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.
Bloomberg reported late Thursday that about 10 hedge funds have taken measure to reduce risks associated with Deutsche Bank amid concern that it might struggle with the penalty.
With the German government giving no sign it is prepared to offer a bailout, if needed, and the bank heavily exposed to risky investments, notably in the derivatives markets, investors have grown increasingly concerned. The Standard & Poor's 500 index sank 20.24 points, or 0.9 percent, to 2,151.13. JPMorgan Chase was up 1.6 percent.
That in turn led to a turnaround in bond markets, where yields had spent much of the day lower. They had fallen 4 basis points earlier to minus 0.161 percent, matching a level struck on Tuesday, which was the lowest since mid-August.
US Justice Department officials had earlier pressed Deutsche Bank to pay $14 billion to settle the case, an amount the lender said was unacceptable and which had raised concerns over its solvency. Its U.S. listing (DB.N) was up more than 12.6 percent.
German economy minister slams `irresponsible` Deutsche Bank
Tokyo investors are also waiting for key U.S. economic data, including jobs figures, slated for release this week, he added. US shares were for a flat opening, with Dow futures and the broader S&P 500 futures up less than 0.1 percent.
Financial stocks slumped on renewed worries about Deutsche Bank.
Brent crude was last down $0.25, or 0.51 per cent, at $48.99 a barrel, but United States crude was last up $0.30, or up 0.63 per cent, at $48.13 per barrel.
However, Spanish telecoms group Telefonica fell 4 percent as the company cancelled the stock market listing of its Telxius business.
TECH TRIUMPHANT: Major stock indexes set records this quarter, and tech stocks were by far the biggest reason. The Wall Street Journal said Qualcomm is in talks to buy its rival, and NXP gained $6.39, or 6.6 percent, to $102.51 and Qualcomm picked up $1.47, or 2.2 percent, to $68.92. On the Nasdaq, 2,046 issues rose and 678 fell.
METALS: Gold fell $8.90 to $1,317.10 an ounce.
"Valuations would justify higher yields, around 0 percent say, but in the current environment there is a flight-to-safety premium that is supporting Bunds", said Orlando Green, European fixed income strategist at Credit Agricole.