Egg reported a first quarter pre-tax loss of �4.9m, down from a �15.7m deficit in the same period last year.

The drop was mainly due to tight controls on spending in France where operating losses fell 34% to �15.8m.

Egg, which has been put up for sale by its majority owner Prudential, said sale talks were ongoing.

The Prudential is seeking to sell its 79% stake in Egg, and said in January that several companies had expressed an interest.

Potential bidders are rumoured to include Royal Bank of Scotland, MBNA, Barclays and Lloyds TSB.

'Solid start'

Despite reducing losses at its French business, Egg reported a fall in operating profits at its UK side.

Operating profits fell to �15.2m from �17.3m at the same point last year, although Egg said the figures were in line with internal forecasts.

"In the UK, Egg has had a solid start to the year," said Paul Gratton, its chief executive.

"In France, we are managing discretionary expenditure tightly as we await the conclusion of the ongoing process whereby Prudential is considering proposals for its shareholding in Egg."