Talks between Iceland and UK authorities about the banking crisis have been described as "positive".

Iceland's Prime Minister and Scottish Secretary Jim Murphy met to discuss the plight of savers and local authorities with cash in failed Icelandic banks.

Mr Murphy is the first British minister to meet Prime Minister Geir Haarde since the banking crisis erupted.

Total UK deposits are estimated at around £4 billion in the country's financial institutions.

Mr Murphy said: "This has been a positive visit. Mr Haarde and his government have been hospitable and helpful and we are all agreed that it is important to find a constructive and co-operative way forward that allows the technical experts to work on the detail of recovering UK savers' money."

Mr Murphy said both countries shared the ultimate aim of achieving a stable banking sector, not only in Iceland but across Europe and further afield.

He said: "The UK Government's primary objective remains to secure the investments of the 300,000 depositors, plus many local authorities, held in the failed Icelandic banks."

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