RBS in £2 billion return to profit

A Royal Bank of Scotland signTaxpayer-backed Royal Bank of Scotland has reported a return to profit in the third quarter as it slashed its bad debts and offset a plunge in income at its under-pressure investment arm.

The taxpayer-backed bank saw shares rise more than 5% or 1.1p to 23.9p after it posted pre-tax profits of £2 billion in the three months to September 30, compared to a 3678 million loss in the previous quarter.
The wider FTSE 100 Index also made tentative gains, adding 12 points at 5560, after Greek prime minister George Papandreou U-turned on plans to hold a referendum on the critical eurozone rescue deal.

The mood was also improved by the European Central Bank's decision to drop interest rates to 1.25% from 1.5%, the first move by its new boss Mario Draghi.

The banking sector benefited from the emerging optimism as Barclays rose more than 2% or 4.5p at 189p and Lloyds Banking Group was up 0.3p at 29.2p.

The mining sector was also ahead with Anglo American up 49p at 2404.5, Antofagasta adding 21p at 1211p and Rio Tinto advancing 44.5p at 3490p.

Elsewhere, British Airways owner International Airlines Group (IAG) lost more than 3% after it unveiled an agreement to buy struggling airline BMI British Midland.

IAG would own more than half of the landing slots at the UK's busiest airport if the deal is completed. Shares were down 5.5p at 162.8p.
© 2011 Press Association
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