London - Slumping banking shares gave the Financial Times Index a roller-coaster ride on the London stock market Tuesday where early gains all but evaporated as pressure grew on the government to agree on a cash bail-out package for leading banks.

The FTSE-Index was up by 1.7 per cent, or 76 points, to 4,665.2 points at lunchtime, after surging ahead by almost 3 per cent in early morning trading.

On Monday, the FTSE plunged by almost 8 per cent in the largest one-day percentage decline since 1987.

But pressure Tuesday focussed on a speculation that the British government is preparing a massive cash injection into leading banks to shore up liquidity for day-to-day operations.

A request by Royal Bank of Scotland (RBS), Lloyds TSB and Barclays was reported to have been made during a meeting of their chief executives with Alistair Darling, the Chancellor of the Exchequer, late Monday.

The government is believed to be working on a bank stabilization scheme of an estimated 45 billion pounds (78 billion dollars) which could be announced later this week.

Shares in RBS at one point slumped by 40 per cent, following reports that it was among three leading British banks that asked the government for a possible capital injection - a claim denied by RBS.

The share price of RBS, which is seen as the most vulnerable to a European banking meltdown, was by about 25 per cent down at lunchtime, at 111.6 pence.

RBS raised 12 billion pounds from shareholders in a rights issue earlier this year. (dpa)