The Chancellor George Osborne is expected to step back from plans to break-up the Royal Bank of Scotland (RBS) amid an expected outcry from some shareholders.
The FTSE 100 opened above 6,700 on Friday as a pick-up in Chinese manufacturing data boosted mining stocks.
Shares in Aberdeen Asset Management have jumped more than 5% in afternoon trading, after the group confirmed it is in talks to acquire Scottish Widows Investment Partnership (SWIP).
Fidelity Worldwide Investments' global CIO for equities, Dominic Rossi, has predicted the FTSE 100 will test a new high as accommodative central banks keep monetary policy loose and rates low into 2014.
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.