* FTSEurofirst 300 up 0.1 pct, pulls away from 1-month low
* Barclays sags on U.S. fraud lawsuit linked to stock
* StanChart weakens as warns on 2014 profits
* Danone rallies on mounting M&A speculation
By Tricia Wright and Blaise Robinson
LONDON/PARIS, June 26 European stocks inched up
on Thursday, halting the previous session's sell-off, but
Barclays led falls in banking shares after the New York
Attorney General filed a lawsuit against it.
Barclays shares fell 5.2 percent after the Attorney General
filed a securities fraud lawsuit against the lender on charges
of giving an unfair edge to its U.S. high-frequency trading
clients even as it claimed to be protecting other customers from
Barclays stock's sharp decline on Thursday represented a
wipe-out in market value of about 2 billion pounds ($3.3
billion). It has lost nearly 20 percent so far this year, a drop
in market value of about 8.9 billion pounds.
"The judicial context is becoming a real drag for the
European banking sector. There are fears among investors of a
contagion effect from the U.S. investigations. After BNP,
Barclays, who will be next?," said Alexandre Baradez, chief
market analyst at IG France.
France's BNP Paribas is in talks with U.S.
authorities over a potential fine related to alleged violations
of U.S. sanctions against Iran, Sudan and other countries.
Sources told Reuters on Wednesday the bank is likely to be
suspended from converting foreign currencies to dollars on
behalf of clients in some businesses for as long as a year.
Shares of BNP - which have fallen about 18 percent since it
first announced a provision for the fine in mid-February - were
flat on Thursday.
According to Credit Suisse analysts, the litigation costs
for the sector have been surging.
"We estimated $104 billion of total litigation costs in our
recent analysis, up from a $58 billion estimate the year before,
and we see upward risk to this estimate," they wrote in a note.
"We have seen banks with legacy litigation risk starting to
materially underperform those less exposed."
Shares in Standard Chartered, fell 4.5 percent. It
warned of lower profits this year after a 20 percent slump in
first-half earnings, as tougher regulations and low market
volatility hit its trading business.
The European banking sector index shed 0.6 percent.
It has underperformed this year, rising 0.4 percent while the
FTSEurofirst 300 index has gained 4.3 percent.
At 1110 GMT, the pan-European FTSEurofirst 300 was
up 0.1 percent at 1,373.20 points, recovering from a one-month
low hit on Wednesday following a downward revision of U.S.
first-quarter gross domestic product.
The data had sparked a pull-back in European bourses on
Wednesday - with the FTSEurofirst 300 ending 1.1 percent lower.
However, later on Wall Street investors brushed aside the
initial concerns and the market inched higher, helped by
speculation the weak data would delay U.S. interest rate hikes.
"The figure was pretty bad. The market might be rebounding a
bit today, but indexes are toppish and in the short term, there
aren't any positive catalysts," IG's Baradez said.
Thursday's rebound was also capped by violence in Iraq,
traders said. Militants attacked one of the country's largest
air bases and seized control of several small oilfields.
Around Europe, the UK's FTSE 100 index, Germany's
DAX index and France's CAC 40 were broadly
Shares in London Stock Exchange Group surged 6.3
percent after the bourse operator unveiled a bid to acquire
investment services firm Frank Russell for $2.7 billion and said
it would launch a rights issue to raise $1.6 billion to help
fund the acquisition.
Shares in Danone rose 2.9 percent after Natixis
upgraded its rating on the shares to 'buy' from 'neutral',
citing increasing speculation that the French food group could
become a takeover target.
Europe bourses in 2014: link.reuters.com/pap87v
Asset performance in 2014: link.reuters.com/gap87v
Today's European research round-up
(Editing by Andrew Heavens)