In London, Royal Bank of Scotland was the biggest riser after Investec Securities raised its target price and restated its buy recommendation as the bank benefits from improved confidence in the mortgage market.

Having risen 13 per cent over the previous seven trading days, they were up by another five per cent, or 15.6p yesterday, although at 320p the stock is still well below the Government’s average break-even price of 502p. Lloyds Banking Group was also 1.7p higher at 69.4.

Barclays was another stock on the front foot yesterday after Friday’s agreement between Nationwide and the Prudential Regulation Authority fuelled hopes that it will be given longer to meet a new three per cent risk threshold.

The prospect of meeting the target by the end of the year had raised the prospect that Barclays will have to issue new shares, but this lifted after Nationwide was given until the end of 2015. Barclays was 3.6p higher at 309.8p.

Security group G4S was among the biggest fallers amid speculation that new chief executive Ashley Almanza will consider a rights issue as part of a review of the beleaguered company’s balance sheet and prospects. The shares have fallen by 20 per cent this year and were down by 2p to 207.5p yesterday. The company has been hammered by the fall-out from its bungled Olympics security contract and last week’s accusations that it overcharged the taxpayer for tagging and monitoring of offenders.

On the FTSE 250, industrial software firm Invensys added another 1.5p, to 509.5p, after a report that America’s General Electric was mulling a move to trump France’s Schneider Electric in a takeover battle that could drive the value of the UK company to more than £3.5bn.