UK stocks were on a rollercoaster ride on Friday amid speculation over investor confidence in German lender Deutsche Bank.

The FTSE 100 Index closed 0.3% or 20.9 points lower at 6899.3, paring losses after dropping as low as 6809.5 earlier in the session.

Meanwhile, sterling rose to 1.30 against the US dollar, and to 1.156 against the euro, after positive economic news out of the UK including an upward revision of second-quarter gross domestic product (GDP).

Official figures showedUK services output expanded by 0.4% in the first month after Britain voted to leave the European Union, driven by rising retail sales, a robust performance from the film industry and computer programming.

The update came as the Office for National Statistics revised its calculation of second-quarter gross domestic product growth from 0.6 per cent to 0.7 per cent.

The ONS said the revision was triggered by a better performance from services and investment in the three months to June.

However, Britain's yawning current account deficit - which measures the amount of money flowing in and out of the economy - grew to £28.7 billion in the second quarter, up from £27 billion in the first three months of the year.

German-listed shares in Deutsche Bank spiked in afternoon trading after reports emerged that it may only have to stump up 5.4 billion US dollars (£4.1 billion), rather than 14 billion US dollars (£10.5 billion), as part of a US Department of Justice settlement linked to the sale of mortgage-backed securities during the financial crisis.

The German lender's shares had slipped to 9.98 euro at one point, their lowest level since the 1980s, but recovered and traded 6.5% up at 11.57 euro in afternoon trading.

Jasper Lawler, a market analyst at CMC Markets, said: "Deutsche Bank shares recovered all of the day's sharp losses on rumours the fine will be announced at the weekend as 5.4 billion US dollars.

"Even at 5.4 billion US dollars, Deutsche Bank would (be) likely to raise capital, though the size may make a rights issue more palatable and makes a government bailout much less likely."

The news aided a recovery in European stocks, with the German Dax closing higher by 1.01% and the French Cac 40 rising 0.1%.

In oil markets, Brent crude hit five-week highs to hover near 50 US dollars per barrel.

Investors were still cheering Opec's tentative agreement to cut oil production levels, reached at an energy summit earlier this week.

In UK stocks, house builders topped the FTSE 100, buoyed by news of strong service sector performance in July, and an upward revision in second-quarter GDP to 0.7% from 0.6%.

Barratt Developments shares jumped 21.4p to 494.3p, Persimmon shares rose 74p to 1815p, Taylor Wimpey rose 4.1p to 154.1p, and Travis Perkins rose 28p to 1544p.

However, shares in outsourcing giant Capita plunged for a second straight session, dropping more than 28p or 4% to 670p after plummeting 26% on Thursday.

It came after the company said pre-tax profits would come in at between £535 million and £555 million for the full year, compared with previous forecasts of £614 million.

JP Morgan, Panmure and Investec all downgraded their price targets for Capita on Friday.

Royal Bank of Scotland (RBS) shares fell 1.7p to 178.8p after the bank announced that it would complete the ring-fencing of its retail banking operations by the end of 2018.

The lender, which is still 73% owned by the Government, is required to separate its investment banking operations from its high street arm by 2019.

The biggest risers on the FTSE 100 were Barratt Developments up 21.4p to 494.3p, Persimmon up 74p to 1815p, Marks and Spencer up 10p to 331.1p, and Taylor Wimpey up 4.1p to 154.1p.

The biggest losers on the FTSE 100 were Capita down 28p to 670p, Rio Tinto down 59.5p to 2574.5p, Sky down 16.5p to 894p, and St James's Place down 17p to 948p.