London - Trading on the London Stock Exchange recovered after Monday's slump as the Financial Times Index was up by more than 2.5 per cent in early trading, reports said.

The FTSE 100 Index rose by 2.6 per cent, or 122 points, to 4,711.48 during the first hour of trading, following Monday's dramatic 8-per-cent slump which represented the largest one-day percentage decline since 1987.

However, shares in the Royal Bank of Scotland (RBS) were down by 20 per cent, adding to a dramatic cut in early FTSE gains and underlining the continuing volatility of the market, analysts said.

They said clarification of Germany's position on backing for private deposits, Tuesday's meeting of European Union (EU) finance ministers and the expectation of a British aid package for banks were all contributing to a stock market recovery. (dpa)