FTSE recovers despite RBS losses

The Footsie added 22.4 points to 5067 by mid-morning

Royal Bank of Scotland led the FTSE 100 Index fallers after it revealed it would have to sell more of its businesses than originally planned to gain approval for state support.

RBS sunk as much as 17% at one point after the announcement before recovering much of the losses to register a 4% decline.

Despite falls for both taxpayer-backed banks, the wider London market started the week in positive territory following steep losses on Friday which saw it close at its lowest level for a month. The Footsie rose 21.9 points to 5066 after the first hour of trade.

RBS, which is set to report its quarterly results later this week, said negotiations with the European Commission and the Treasury were close to conclusion and would "include some divestments not initially contemplated". Shares fell 1.97p to 39.95p.

Lloyds, which is reportedly on the verge of announcing a deal with the Government over plans to evade a state insurance scheme for toxic assets, also took a tumble. Shares lost 0.99p to 86.04p.

Meanwhile in the FTSE 250, directories group Yell said enough lenders had approved its plans to restructure its £3.8 billion debt mountain.

Shares in the Yellow Pages owner climbed 13%, or 6.75p to 58p, on the news that it would now go ahead with plans to raise at least £500 million.