Shares in the Royal Bank of Scotland have slumped in morning trading after Chancellor George Osborne said a break-up of the semi state-owned lender could take place "within weeks".
The price of Royal Mail shares has soared well above the government's offer price after conditional trading in the company began this morning.
The FTSE 100 has surged in afternoon trading - rising over 100 points - as hopes mount US politicians will agree a deal on the country's sprawling budget deficit.
UK shares had a shaky start to the week as negotiations over the US debt ceiling continue to drag on.
Aviva and Aberdeen Asset Management sat atop the FTSE 100 leaderboard on Thursday morning but the wider market remained subdued.
Supermarket giant Tesco led the FTSE 100 lower this morning after revealing its profits had dropped off sharply.
Tesco, the UK's biggest supermarket chain, has reported a drop in profits of 23.5% in the first half of its financial year.