Europe close: Shares start week on the front foot

European stocks finished in the black as oil prices turned higher, with Deutsche Bank managing to shake-off earlier losses, although shares RBS succumbed to new allegations concerning its treatment of SME's in the aftermath of the financial crisis.

The Stoxx Europe 600 index was up 0.69%, while Germany’s DAX was 1.27% higher and France’s CAC 40 was up 1.06%.

Acting as a backdrop, Wall Street was open for business on Monday but the Columbus Day holiday meant trading volumes were lighter than usual, although the main equity gauges were up in early trading in the wake of the latest televised debate between the two main contenders to the US presidency.

Oil prices perked up, with West Texas Intermediate 2.72% firmer at $51.20 a barrel and Brent crude up 2.15% at $53.07.

Meanwhile, the pound remained under pressure versus the dollar but off earlier lows, down 0.43% at $1.2380.

Oanda’s Craig Erlam said: “It’s been a slow start to the trading week, as a lack of news flow in Europe and Asia, combined with bank holidays in Japan, Canada and the US hit trading volumes.”

In corporate news, investors were initially disappointed that Deutsche Bank chief executive John Cryan did not strike a deal with US authorities over a $14bn fine for the mis-selling of mortgage-backed securities during the weekend. Some had hoped that Cryan, who was attending the International Monetary Fund and World Bank’s autumn meetings in Washington, might have been able to negotiate a settlement.

The Financial Times reported on Monday that Deutsche Bank was given special treatment in the European bank stress tests carried out over the summer.

According to the FT, the lender, which has been using the results of the July stress tests as evidence of its healthy finances, was boosted by a special concession agreed by its supervisor, the European Central Bank. Also over the weekend, the FT reported Deutsche Bank might be mulling a flotation of its asset management arm in a bid to raise fresh equity.

Sticking with banks, Royal Bank of Scotland was also weaker amid reports of leaked documents showing it pushed smaller business customers to default on their debts so it could then buy the assets up on the cheap. RBS denied the reports and told the BBC a review had found no evidence that it had deliberately caused businesses to fail.

EasyJet flew lower again after Societe Generale downgraded the stock to ‘sell’ from ‘hold’ following the company’s profit warning last week.

German utility E.ON was in the red as it came under scrutiny again at the weekend for its Uniper spinoff.

On the upside, bookmaker William Hill rallied after confirming it was in merger talks with Toronto-listed Amaya Inc, owner of the PokerStars website, having rejected offers from smaller UK rivals in the summer.

Media conglomerate Vivendi was firmer after French billionaire Vincent Bollore upped his stake in the company to over 20%.