(Corrects to clarify U.S. Department of Justice is demanding a
$14 billion settlement in talks with Deutsche Bank, but has not
yet levied a fine)
* Wall Street weighed down by banks, energy stocks
* European markets lower as Deutsche Bank fine risk hits
* Rising rents, healthcare costs boost U.S. consumer prices
* Yields, dollar rise on inflation data
* Oil drops as growing supplies stoke glut concern
By Saqib Iqbal Ahmed
NEW YORK, Sept 16 The possibility of a $14
billion fine for Deutsche Bank and a slide in oil prices hit
financials and energy stocks on Friday, leading most global
stock indexes lower.
U.S. data showing a strong increase in August consumer
prices bolstered those arguing for the Federal Reserve to raise
interest rates later this year, helping send U.S. Treasury
yields and the dollar higher.
Stocks fell as investors dumped shares of banks in North
America and Europe after the U.S. Department of Justice proposed
Deutsche Bank pay $14 billion to settle an
investigation of its selling of mortgage-backed securities.
Deutsche Bank, whose shares dropped roughly 8.5 percent,
said it would fight the demand.
MSCI's world stocks index was down 0.57
percent, on pace for a second straight weekly loss.
Energy share prices were cut by a drop in oil prices as
rising Iranian exports and returning supplies from Libya and
Nigeria fueled concerns a global glut would persist.
Brent crude was down 1.4 percent at $45.94 a barrel,
while U.S. crude was down 1.9 percent at $43.07.
"When oil goes down, investors get nervous about the risk of
default in the energy patch," said Thomas Wilson, senior
investment manager at Brinker Capital in Philadelphia.
The Dow Jones industrial average fell 66.63 points,
or 0.37 percent, to 18,145.85, the S&P 500 lost 8.61
points, or 0.4 percent, to 2,138.65 and the Nasdaq Composite
dropped 8.39 points, or 0.16 percent, to 5,241.30.
The S&P energy index was down 0.72 percent while the
S&P financials index was down 0.83 percent.
European shares were headed for their worst weekly
performance in three months. Europe's broad FTSEurofirst 300
index was down 0.79 percent at 1,328.49.
U.S. Treasury yields, meanwhile, rose after data showed U.S.
consumer prices increased more than expected in August, pointing
to a steady build-up of inflation.
Benchmark 10-year notes were last up 3/32 in
price to yield 1.69 percent, after trading at 1.67 percent
before the data.
The so-called core CPI, which strips out food and energy
costs, increased 2.3 percent in the 12 months through August,
above the Fed's target of 2 percent annual inflation.
The uptick in inflation is likely to be welcomed by Fed
officials when they meet next Tuesday and Wednesday to
deliberate on monetary policy.
"It certainly is another thing that could help them increase
their trend toward normalization," said Mary Ann Hurley, vice
president in fixed income trading at D.A. Davidson in Seattle.
Futures traders are pricing in a 51.8 percent chance the Fed
will raise rates at its December meeting, up from 47.5 percent
on Thursday, according to the CME Group's FedWatch Tool.
While the inflation data pushed the dollar to a more than
two-week high against a basket of major currencies, uncertainty
ahead of a Bank of Japan policy meeting on Wednesday limited the
dollar's gains against the yen.
The dollar index, which measures the greenback
against a basket of six major currencies, was up 0.69 percent to
Spot gold prices slid 0.36 percent to $1,309.01, a
two-week low to a two-week low.
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Karen
Brettell in New York and Yashaswini Swamynathan in Bengaluru;
Editing by Dan Grebler)