Banks fuelled FTSE 100 gains this morning after the sector was lifted by reports that Abu Dhabi was considering making a bid for RBS assets.
Talks between Abu Dhabi and the British government over a stake in state-owned Royal Bank of Scotland are at the level of the Abu Dhabi ruling family, a source close to the family said.
The boost for banking stocks came after world stocks closed in on a 2012 high lifted by a belief that the US Federal Reserve will continue supporting economic growth.
Federal Reserve Chairman Ben Bernanke said that a loose monetary policy would remain in place for some time and support the fragile recovery.
On London's blue chip index RBS was up 4.5 per cent with Barclays and Lloyds up around two per cent.
Barclays chief executive Bob Diamond said his bank has had an "encouraging" start to the year, across key areas such as retail and investment banking.
And HSBC chairman Douglas Flint, speaking at the same conference, said: "2012 has started well, the first quarter." HSBC shares were up 1.4 per cent.
Aberdeen Asset Management lifted by 2.4 per cent following its positive results announced yesterday with client funds on the rise.
Miner Kazakhmys nudged up by 2.1 per cent after reporting healthy profits while Rio Tinto lifted by just over one per cent after saying that its diamond business was up for sale.
The mining sector overall was on the up after recently being dented by fears over slowing growth in China. BHP Billiton, another heavyweight, also put on 0.8 per cent.
On the downside insurance buyout vehicle Resolution was down by 6.9 per cent after announcing plans to split the business into two which failed to impress investors.
The share price fall came despite the company reporting forecasting beating profits for 2011.
Building services giant Wolseley edged down by 0.8 per cent after reporting a profit rise but warning of tough markets in Europe.
The world's largest caterer, Compass, was off by more than two per cent with National Grid also slipping by a shade over one per cent.
Meanwhile in Asia the Nikkei closed up 2.3 per cent and the Hang Seng 1.8 per cent.