EASING fears over swine flu saw shares in drugs company GlaxoSmithKline fall yesterday as the FTSE reopened following the bank holiday weekend.

The pharmaceutical company, which has a plant in Barnard Castle, saw a rise in its share price last week on the prospect of increased demand for treatments and vaccines.

Yesterday its shares fell one per cent, but travel firms, who had seen shares fall on the back of worries over swine flu were able to enjoy a more positive day.

British Airways shares rose eight per cent and Thomson owner TUI Travel added seven per cent.

Declining concern about the severity of the outbreak, and a five-month high for oil prices, also helped to extend the run that saw the FTSE 100 enjoy its best month in six years, in April. Hopes over results of key US bank stress tests due later this week had sent banking stocks soaring on the Dow, with its UK counterparts feeling the benefits.

Royal Bank of Scotland rose 13 per cent in what looks to be a busy week for banks, with trading updates from a number of major players, including RBS and Barclays.

Asian-facing bank Standard Chartered saw its shares rise seven per cent after a solid first quarter.

The mood was also helped ahead of the results of the US stress tests, due later this week, as investors bet that banks would not need to raise as much capital as was feared.

RBS was joined on the risers board by Lloyds Banking Group and Barclays, up 11 per cent and six per cent respectively.

Matt Buckland, dealer at CMC Markets, said stocks were playing catch up yesterday after the Monday bank holiday, but cautioned it could be a volatile week, adding: “As the week progresses we have a huge volume of news – it may be a short week but it’s not going to be a quiet one.”

First-quarter figures from Swiss bank UBS also highlighted the need for caution.

It said that, while there had been a shift in mood on the stock markets, the banking crisis and recession was not yet over. Complex financial instruments remain hard to trade and credit markets have only slightly improved, with the potential for more hefty bad debts as the recession continues to run its course.

It added: “The markets continue to be unsettled and we remain cautious on the immediate outlook for UBS.”