Bank shares show signs of recovery

Royal Bank of Scotland shares have risen 17% this morning, despite having plunged 67% on Monday.

Yesterday the bank predicted a record loss of £28bn for 2008, which it is expected to report next month. It has lead to speculation that the sale of its insurance division could become increasingly likely.

Other shares in the banking sector also rose in early trading following big falls on Monday.

Lloyds Banking Group shares were up around 1.6% in early trading on Tuesday. Its shares fell 34% on the first day after it completed the acquisition of HBOS.

Barclays shares also rose around 7%.