Banks hopeful over results of EU's stress tests

Britain's four biggest banks face a moment of truth today when EU regulators publish the results of their stress tests on lenders.

Barclays, HSBC and their part-nationalised counterparts Lloyds Banking Group and Royal Bank of Scotland are on the list of 91 banks - 65% of the sector in the EU - that are being gauged for resilience and ability to withstand economic and credit shocks.

Shares in blue chip banks made solid gains yesterday as investors appeared optimistic, with Barclays up nearly 5% and Lloyds and Standard Chartered also seeing increases.

Markets are hopeful the tests will be stringent enough to generate confidence in the battered European sector, which has suffered amid the fallout from the Greek debt troubles.

The Committee of European Banking Supervisors, the London-based umbrella body for Europe's financial regulators, will publish the findings of its exercise at 5pm.

The Financial Services Authority has said it expects the British banks to pass, having subjected the groups to its own tough tests last year.

But there were reports that some smaller banks in Spain and Germany may have failed, which could further rock confidence in Europe.

Experts have also voiced fears that if the exercise is not seen as being credible, the results will not be taken seriously.