RBS shares down 5%

Royal Bank of Scotland shares slid 5% today as rumours of a “modest” City fundraising in order to limit Treasury support got a lukewarm response.

Chief executive Stephen Hester is reportedly testing appetite for a cash call as he looks at ways to keep the Government’s stake pegged at 70% following the bank’s expected involvement in a scheme to insure toxic assets.

RBS shares fell 2.85p to 53.45p in a lacklustre start to the week for the market, with the FTSE 100 Index down 44.2 points at 5128.7 by mid-morning.

Fellow part-nationalised bank, Lloyds Banking Group, was also under pressure - down 3% or 3.2p to 107.45p after disclosing on Friday that it was looking at possible alternatives to the Government’s asset protection scheme.

Markets worldwide were under pressure as investors opted to stay on the sidelines ahead of a key meeting of the US Federal Reserve.

Recent indicators have supported hopes of global economic recovery, although this will be put to test on Wednesday with comments from the Fed and the Bank of England following the publication of minutes from its latest meeting.

Historical trends suggest that the UK stock market could be due for a dip this week. Stock market historian David Schwartz said that since 1993 the FTSE 100 has fallen between September 20 and 25 in 14 different years versus just two advances. One of the two gains was a marginal 0.1% rise in 1998.

In a quiet day for corporate news, broker comments determined a number of the major moves in the top flight.

Mining stocks Kazakhmys and Vedanta Resources fell 41p to 1083p and 63p to 1947p after being downgraded.

Cable & Wireless dipped 3.6p to 146.7p after broker ING downgraded the telecoms group from buy to hold due to continued pressure in the Caribbean and Panama.