Hopes of a stake sale in RBS
At 10:38 a.m., the FTSE 100 <.FTSE> index was ahead 3.65 points, or 0.1 percent, at 5,905.35, having stalled in a push back up towards its 2012 peak of 5,989.
Royal Bank of Scotland was the top FTSE 100 gainer, up 4.4 percent, after people familiar with the matter said Britain had held talks to sell part of its stake in the bank to Abu Dhabi investors.
Abu Dhabi, one of the oil-rich states of the United Arab Emirates, could be attracted to a deal after making billions of pounds on a bet on rival British bank Barclays
A reduction in state ownership of RBS is likely to be positive for sentiment, in our view, as it reflects a potential reduction in political risk, but without further details on potential price, terms and timing, it is difficult to have a definitive view, Shore Capital analyst Gary Greenwood said in a note.
Barclays was higher in sympathy, ahead 2.1 percent.
Mining stocks <.FTNMX1770> also stood out, tracking a firmer copper price, which jumped 2 percent higher on Monday after U.S. Federal Reserve Chairman Ben Bernanke pledged to keep an accommodative monetary policy, boosting demand expectations for risk assets such as commodities and equities.
WALL STREET AWAITED
U.S. stock futures pointed to further gains on Wall Street, following a surge in the previous session, after Bernanke signalled a supportive monetary policy would remain even though the job picture has begun to improve.
Investors will look to the S&P/Case-Shiller Home Price Index for January, due at 13:00 p.m., and Conference Board March consumer confidence data, at 1400 GMT, to provide fresh clues as to the state of the U.S. economy.
Once again we are through the looking glass, in a world where stocks rise on hopes that U.S. economic data will weaken, since this then raises the probability that the Fed will launch QE3 (a third round of quantitative monetary policy easing), said Ben Critchley, Sales Trader at IG Index.
We remain stuck in a world where markets seem unable to cope without the possibility of monetary stimulus, underscoring the fact that the global economy still has some way to go before it is successfully weaned off active central bank intervention.
Integrated oils <.FTNMX0530> were the biggest drag on blue chip sentiment, having reversed early gains as profit takers moved in following strong gains in the previous session.
Also on the downside, Compass Group
(Editing by Mark Potter)