Shares in Barclays (>> Barclays PLC) featured among the biggest losers, down 1 percent. The bank, a major player in the foreign exchange market, had been expected to be part of the settlement but the FCA said its investigation into the British bank was continuing.

Global regulators imposed the penalties on five leading banks including UBS (>> UBS AG), HSBC (>> HSBC Holdings plc) and Citigroup (>> Citigroup Inc) on Wednesday in the settlement.

Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) and JP Morgan (>> JPMorgan Chase & Co.) were also fined for attempting to manipulate foreign exchange benchmarks in a year-long probe that has put the largely unregulated $5 trillion-a-day market on a tighter leash, with dozens of dealers suspended or fired.

The STOXX Europe 600 Banks Index <.STOXX> retreated by 0.4 percent, although UBS (>> UBS AG) rose by 0.4 percent, as some traders said the fact that UBS had reached a settlement on the matter was a positive development.

"Now that the fines have been done and dusted, it may not be taken too badly by the market," said Terry Torrison, managing director at Monaco-based McLaren Securities.

(Reporting by Sudip Kar-Gupta; editing by Blaise Robinson)