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13:34  BUSINESS:  FTSE up despite RBS sell-offview list
02/11/09

Royal Bank of Scotland suffered an 8% tumble today following news that it would have to offload greater-than-expected chunks of its business as part of negotiations over state aid.

The bank - 70% taxpayer owned - has come up against European competition rules and is expected to have to sell off parts of its investment bank and its Churchill insurance arm as well as more than 300 branches in England.

Falls among financial firms failed to derail a rise for the wider FTSE 100 Index today however after the market closed at its lowest level in a month on Friday. The Footsie rose 29.5 points to 5074 by lunchtime as miners added weight to an upturn.

London's rise was helped by better than expected manufacturing data that showed output at its highest level for almost two years last month.

The figures were echoed in a similar report for Eurozone indicating that the sector expanded for the first time in a year and a half.

RBS saw its shares drop 3.2p to 38.72p today after it said it would have to make sales "not initially contemplated". The bank is expected to announce the results of its lengthy negotiations with the European Commission and the Treasury shortly.

Lloyds - thought to be on the verge of a deal over fundraising plans to evade a taxpayer-backed insurance scheme for toxic assets - also took a tumble. Shares in the Government-supported bank lost 1.87p to 85.16p, or 2%.

Market speculation of revived bid interest in Rio Tinto from BHP Billiton helped give the mining sector a boost. Rio added 83.5p to 2776.5p, although the Footsie's top riser was Eurasian Natural Resources - 42.5p ahead at 876p.

In the FTSE 250, directories group Yell said enough lenders had approved its plans to restructure its £3.8bn (€4.2bn) debt mountain.

Shares in the Yellow Pages owner cheered nearly 2%, or 1p to 52.25p - after rising 13% earlier - as it said it would now press on with plans to raise at least £500m (€553.8m) .

Budget airline easyJet was meanwhile down 1.30p at 358.8p after rival Ryanair announced a big jump in profits thanks to lower fuel prices but said it would be loss-making in the second half of its financial year.

In the top flight, British Airways was down 4.4p to 177.4p ahead of heavy first-half losses expected on Friday and amid a continuing disagreement with unions over its staffing plans.