RBS surges on profit jump as EU talks lift markets

London and European stock markets edged up as the G20 talks in Cannes continued on Friday, with Royal Bank of Scotland boosting the UK after climbing 5% on its profits update.

RBS, which has been heavily sold off during the turmoil, rose 4.2% to 23.8p in early trading as investors digested a jump in profits to £2bn.

Profits were given a lift by an increase in the value of debt sitting on its balance sheet, with investors reacting favourably to the update.

RBS led the wider market higher, with the FTSE 100 ahead 0.7%, or 36 points, to 5,581.

In Europe shares were mixed, as talks on how to solve the debt crisis got back on track following the Greek referendum debacle.

The German Dax shed early gains to trade down 8 points at 6,124 by mid-morning, while the French Cac 40 was up 12 points at 3,207.

Markets were thrown into turmoil this week as plans for a referendum over whether or not Greece should accept a eurozone bail-out packet emerged. Many feared citizens would vote to stay out the euro prompting a disorderly default and contagion risk spreading to Spain and Italy.

But markets rallied yesterday on the news that such a move looked less likely after Greek prime minister George Papandreou scrapped the plans.

Today he faces a landmark confidence vote within Greek parliament.

The abandonment of the referendum buoyed both Asian and US markets overnight, the Dow Jones closed 1.76% up at 12,044, while the S&P 500 Index closed 1.88% higher at 1,261.

Asian shares saw the strongest rally. The Nikkei 225 gained 1.86% to 8,801 and the Hang Seng gained 3.12% to reach 19,842.

Meanwhile the price of both crude oil and gold remained at steady levels seeing 0.2% gains to reach $111 per barrel and $1758 per ounce respectively.