Lloyds Banking Group shares have climbed above the 61p level which the UK government regards as its breakeven level, another sign that a sale of the stake could be on the cards.

Lloyds is currently up 1.41p at 62.32p having touched a high of 63.3p, following an upbeat statement at Thursday's annual meeting. Chief executive Antonio Horta-Osorio told shareholders the bank would make its first full-year profit since 2010:

We expect [the restructuring of the bank] to enable us to return to profitability this year and to grow our core business, to realise our full potential to deliver strong stable and sustainable returns for you, the shareholders, and to allow UK taxpayers' investment in the group to be repaid.



This optimism outweighed any investor concerns about a swathe of shares owned by the government suddenly being made available, perhaps in a share sale to the public. UK taxpayers own 39% of Lloyds - as well as 81% of Royal Bank of Scotland - following a bailout of the banks during the financial crisis.

On Wednesday prime minister David Cameron suggested the stakes could be sold at a loss to the government. . The average price paid for Lloyds shares was 73.6p, but in March the Treasury appeared to signal that 61p - the price of Lloyds shares in the market at the time rather than the purchase price - as its preferred measure. It linked Horta-Osório's bonus to selling off a third of the taxpayer stake above 61p.

But analysts believe the shares may have to have an extended period above 61p before the government would act. Mike van Dulken, head of research at Accendo Markets, said:

Traders like the idea of recovery potential (both structurally and economically) and a return to profitability meaning a return to those long lost dividends.

The big question now is to what extent the government makes the most of existing momentum...It's a big trade off between returning the shares to the markets as quickly as possible (well before the 2015 election anyway), and taking the opportunity to make up for some of the costs taxpayers incurred via forced bailouts. Sentiment helping peer and fellow bailout victim RBS.

Indeed, RBS is up 2.3p at 321.1p, still well below the average price paid of 502p paid by the taxpayer.

Despite the rise in Lloyds and RBS shares, the overall market has slipped back after Thursday's weak US housing and jobs data, as well as concerns the US Federal Reserve may be moving closer to ending its bond purchasing programme. Central bank measures have helped lift global markets, and the prospect of an end to this stimulus is beginning to be taken seriously.

So after a ten day winning streak was ended on Thursday, the FTSE 100 has dipped another 6.25 points to 6681.55.

Elsewhere Morrisons has jumped 4.8p to 287.4p after agreeing its long-awaiting tie-up with online grocer Ocado, which has soared nearly 24% to 250p.