RBS brightest performer on FTSE

Royal Bank of Scotland shares rose 5% today after weakness in the commodities sector was offset by a flurry of buying interest in financial stocks.

The wider London market remained close to its opening point, with the FTSE 100 Index 10.9 points higher at 4447.6 by mid-morning.

There had been hopes of a sustained rally for the FTSE yesterday after oil prices of more than $71 (€51) a barrel powered energy firms. But the 4500 barrier again proved a step too far after a retreat in afternoon trading which continued into the opening hour of trading today.

Oil firms were on the back foot after recent gains, with Royal Dutch Shell off 15p at 1669p and BP down 4p at 529p.

RBS topped the risers board amid further speculation about how UKFI, the British government body responsible for taxpayer stakes in the state-backed banks, could recover part of the country’s £70bn (€82bn) investment.

One theory is that an exchangeable bond would allow UKFI to sell RBS and Lloyds stock at a premium to the prevailing price, potentially profiting on the investments before the shares have returned to the government’s entry level.

RBS shares rose 2p to 39.9p following the report in the Daily Telegraph, while Lloyds added 2p to 67p. In a strong session for the financial sector, Barclays added 7.25p to 295.75p and HSBC gained 14.25p to 550.25p.

The main corporate news of the session came from Home Retail Group after it reported the first positive sales figures from its Homebase DIY chain in two years. But the update failed to inspire the company’s share price, which edged a penny lower to 265p.

Travel group Thomas Cook was one of the leading top blue-chip risers, up 3.75p to 222.75p, as traders continued to speculate about the 52.8% stake held by collapsed German retail group Arcandor.