Credit Suisse and Deutsche Bank have been hit with a combined penalty of more than $12 billion over the sale of U.S. toxic debt, further hampering two of Europe's leading investment banks as they struggle with weak earnings. The penalties stem from an initiative launched by U.S. President Barack Obama to pursue banks for selling sub-prime debt without warning of the risks, a practice that led to the worst economic crisis since the Great Depression.
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 Christmas break. 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.
World stock markets rose on Tuesday, helped by solid corporate earnings in Europe, progress on Greek debt talks, and a new pledge by Japan that it was prepared to weaken its currency. The MSCI All-Country World index climbed 0.4%, the pan-European FTSEurofirst 300 index advanced 1.3 percent, while the MSCI Emerging Market indexalso edged higher.