Midday Market: banks lead shares higher

UK markets remained higher midday as investors welcome the latest news on bank bailout plans on both sides of the Atlantic.

US markets are expected to move higher in opening deals, adding around 70 points as investors warm to yesterday's news on state aid for banks.

The FTSE 100 was up 44.71 points, or 1.16%, to 3893.92 and the FTSE 250 was up 40.06 points, or 0.66%, at 6082.26. 

RBS posted sharp gains, up 5.4p, or 23.38%, at 28.5p as it reported a slightly lower than predicted loss of £24.1 billion – a loss of £7.9 billion and write-downs of £16.2  billion –  and unveiled plans to raise a further £13 billion by issuing yet more shares to the government. The market had been looking for a loss of £25.9 billion.

The bank said it would insure assets with a par value of £325 billion through the government's toxic asset protection plan and is now fit and ready to lend £25 billion to home owners and business this year and a further £25 billion in 2010.

The news was taken well as many hope this is the start of the recovery in the group's share price as it is now hoped nationalisation can be avoided.

The news also lifted peer Lloyds Banking group as many observers said the terms were much more favourable than had been expected. Lloyds confirmed today that it too is in talks with the government about insuring some of its so-called assets.

The group is due to report its numbers in the morning. There is also talk that the government terms may be attractive enough to persuade Barclays to jump on aboard too. Shares added 7.8p at 113.4p

RSA was up 14.5p, or 11.51%, to 140.5p after its full year results.

Other insurers were up, taking heart from the improved sentiment in the market. Legal & General said today it is looking to shed around 5% of its staff.

Its shares rose 5.5p to 40.40p.

Shares in Prudential were up 26.75p at 294.5p and Old Mutual were 3.3p higher at 43.9p.

Selected retailers also got a boost as HSBC upgraded its view on Next, up 35p at £11.78 and Kingfisher, up 3.3p at 132.5p.

On the second Line, National Express shares added 17.25p to 242.25p after its numbers.