(Adds UK GDP, Wall Street open, updates prices)
* Deutsche, Credit Suisse settle US mortgage securities
* Italy approves Monte dei Paschi bail-out
* Dollar off slightly but hovers near recent peaks
* UK Q3 GDP ahead of estimates, cushions sterling
By Vikram Subhedar
LONDON, Dec 23 European stocks edged higher on
Friday, helped by banks after two regional bellwethers settled
investigations into U.S. mortgage securities, while oil and the
dollar were on the back foot in light trading ahead of the
In another boost to European financials, a bailout for
Italy's oldest bank Monte dei Paschi was approved as the
country's government looks to end a protracted banking crisis
that has gummed up the economy.
Futures on Wall Street pointed to a flat open.
European shares were up 0.1 percent with euro zone
banks up 0.6 percent and comfortably outperforming
broader markets. An index of Italian lenders rose by
While Monte dei Paschi shares were suspended from trading,
Italian government bond yields fell with 10-year yields slipping
4 basis points to 1.81 percent.
"Banks run the show today," analysts at Kepler Chevreux said
in a note to clients, adding that the newsflow around Italian
lenders was turning positive.
Deutsche Bank's $7.2 billion settlement with the U.S.
Department of Justice (DOJ) over toxic mortgage securities sold
in the run-up to the 2008 financial crisis was nearly half of
the fine initially levied in September. Deutsche Banks shares
rose 2.7 percent and are up 86 percent since September lows.
Credit Suisse fell 0.6 percent, giving up earlier
gains, after it agreed to pay $5.3 billion to the DOJ to settle
similar charges. Barclays became the latest in a long-list of
other lenders under investigation to be sued.
Elsewhere, markets were quiet, with UK markets closing at
The dollar headed into the Christmas break on Friday just
over half a percent off highs hit after this month's U.S.
Federal Reserve policy meeting.
The dollar is up more than 7 percent against a basket of
currencies since lows hit on U.S. election night in November but
has been flat for the past week.
The dollar index, hovering near a 14-year high, was
marginally lower at 103.03 but remained within striking distance
of the week's 103.65 peak.
"My overall sense is that we'll start the year eking out
further gains from the post-Trump trends, before we get a change
of tack," said Societe Generale strategist Kit Juckes.
The euro was also a shade firmer at $1.0440, having
rebounded only modestly from a nearly 14-year low of $1.0350 set
earlier in the week.
Sterling headed for its biggest weekly fall in almost
three months on Friday, although data showing that the British
economy grew faster than expected in the third quarter helped
lift it from a seven-week trough against the dollar.
The UK economy expanded at a 0.6 percent pace in the three
months to September, faster than the original estimate of 0.5
percent, suggesting there has been no "Brexit" hit to economic
activity so far since the June 23 vote to leave the European
Oil prices slipped, eroding some of the gains in the
previous session as traders took profits.
Brent crude for February delivery dropped 36 cents,
or 0.7 percent, to $54.69 a barrel after ending 1.1 percent
higher on Thursday. U.S. West Texas Intermediate crude
fell 39 cents, or 0.7 percent, to $52.56 a barrel after gaining
0.9 percent in the previous session.
(Additional reporting by Patrick Graham, editing by Mark