Shares in British banks were up on the FTSE 100 in morning trading following falls earlier in the week.

A report by the Wall Street Journal at the beginning of the week suggested that "stress tests" on European banks earlier in the year had underestimated the vulnerability of top banks to sovereign debt.

All of Europe's publicly listed banks passed the stress tests and only seven smaller banks on the continent failed.

In other news Lloyds Banking Group said that it would be selling its stake in the housebuilder Crest Nicholson to Varde, a US investment firm. According to the FT the sale will bring in £150 million for Lloyds Banking Group.

By 10:05 shares in Lloyds Banking Group were up 3.00 per cent to 74.49 pence per share, RBS shares increased 2.01 per cent to 46.75 pence per share, Barclays shares rose 2.04 per cent to 314.30 pence per share and HSBC shares climbed 0.34 per cent to 657.00 pence per share.

Overall the FTSE 100 was up 0.50 per cent to 5,456.95.