Credit card insurer CPP Group saw shares plummet by nearly a fifth after the City regulator said the group and a raft of high street lenders will fork out up to £1.3 billion in compensation for mis-sold credit card and identity theft protection.
The Financial Conduct Authority (FCA) said 13 banks and credit card firms, together with CPP, have agreed to a compensation package that will see CPP contact around seven million customers directly.
Shares in CPP plunged by 18% or 3.6p to 16.3p, with the settlement coming after CPP was already fined £10.5 million for the mis-selling scandal, but encouraging global economic data helped the wider FTSE 100 Index break its recent losing streak - up 51.8 points to 6442.7.
Stocks were given a boost by figures showing China's factory sector grew for the first time since April, while robust manufacturing data from Germany added to the cheer and helped outweigh concerns over America's plans to taper its quantitative easing drive.
The Dow Jones Industrial Average fell by more than 100 points overnight after minutes of the US Federal Reserve's July meeting showed officials were "broadly comfortable" with plans to scale back bond-buying.
In London, banking shares shrugged off the mis-selling compensation blow, with Royal Bank of Scotland up 6.1p to 340.2p and Lloyds Banking Group ahead 0.8p to 74.7p despite being listed among those due to offer redress.