Britain's leading shares rose 0.5 percent on Monday, led by firmer banks and commodity issues after falls in the previous session, while British Airways climbed on increased hopes for a global alliance. At the close, the FTSE 100 index was 25.02 points higher at 5,167.47, well below the session peak of 5,194.29.
"Investors have taken the opportunity to pick up some bargains after recent falls without the distractions of Wall Street, notably in the miners and the banks," said Mic Mills, senior trader at ETX Capital. Banks, knocked back recently by uncertainty over the European Union's rescue plan for Greece, saw a relief rally.
Barclays, due to report full-year results on Tuesday, was the top blue chip riser, up 5 percent, while Lloyds Banking Group and Royal Bank of Scotland added 0.5 and 1.1 percent, respectively. Life insurers also saw good gains led by Legal & General, up 2.4 percent ahead of new business numbers due on Wednesday, with Aviva ahead 1.7 percent.
Appetite for riskier assets also returned as worries over China's recent tightening of monetary policy faded, with miners the best off. Anglo American, Fresnillo, Xstrata, and Kazakhmys added 0.9 to 1.7 percent. Rio Tinto was the strongest sector performer, up 2.1 percent as Merrill Lynch issued an upbeat note on the global miner, adding it to its "Europe 1 list". Energy issues gained as crude prices ticked higher, with BG Group, BP, and Royal Dutch Shell up 0.1 to 0.4 percent.
British Airways was also a top FTSE riser, up 2.6 percent after the US Department of Transportation gave tentative approval to grant anti-trust immunity to American Airlines and its four "oneworld" partners, including BA, to form a global alliance.
Broker comment lifted drugmaker GlaxoSmithKline 0.5 percent, with J.P. Morgan upping its rating to "neutral" from "underweight". Pharma peers AstraZeneca and Shire also gained, up 0.7 and 0.8 percent, respectively. But other defensive issues were among the top blue chip fallers, with British American Tobacco and Imperial Tobacco off 0.5 and 0.9 percent, respectively. Europe's top home improvements retailer Kingfisher fell 1.9 percent ahead of results due on Thursday.
BT Group was the top FTSE faller, shedding 2.5 percent, under pressure after last week's pension deficit news. Support services firm VT Group saw the main mid cap excitement, jumping 15 percent after peer Babcock said it had made an indicative bid proposal to VT. The Babcock move came on the day VT heated up its own hostile bid battle for small cap Mouchel Group with an increased 330 million pound bid. Babcock shed 8.8 percent.