MINING giants and part-nationalised banks grabbed the top spots on the London market yesterday as the index gained 0.5 per cent – while attention remained fixed on the Greek bailout.
The benchmark FTSE 100 Index closed up 30.2 points at 5,753.85 as Wall Street also gained in the opening hours of trade, helped by positive earnings reports that built on Friday's upbeat US housing market data.
The other major European markets were more than 1 per cent higher amid hopes that Greece's aid package will ease its debt crisis.
But the euro was back under pressure as fears resurfaced over the risk that Greece's problems might spread to other EU countries and that a debt restructuring or even default could still be on the cards.
Commodity stocks benefited after a rise in metal prices as Antofagasta lifted 70.5p to 1,064p and Kazakhmys rose 50p to 1,480p.
The performance of the state's banking shares carried extra significance because of Royal Bank of Scotland's admission at the weekend that it will need to reform its long-term bonus scheme.
RBS, which climbed 2.25p to 58.05p on improved recovery prospects, plans to revisit the details of the plan, which had a 50p threshold for the share price element of the payout.
Meanwhile, the taxpayer received a further boost as Lloyds Banking Group moved 1.76p higher at 70.24p. At current levels, the government/taxpayer is comfortably out of the red on its stakes in the two banks.
Lloyds is widely expected to flag its first ever profit when it reports on Q1 trading today. The bank, 41 per cent owned by the taxpayer, may even be able to include an additional 1 billion boost to profits, by a one-off gain from a decision made in December to curtail the benefits in its own pension scheme.
The biggest faller in the top flight was BSkyB, which dipped 2 per cent – off 14p to 616p – after broker Jefferies International lowered its rating on the stock to "hold". The satellite broadcaster is due to present quarterly figures this week.
Takeover talk had a major impact on shares in the FTSE 250 Index, led by power supply firm Chloride which received a takeover approach from US industrial giant Emerson Electric.
The second approach in as many years from Emerson values Chloride at 723 million and caused shares in the UK firm to rally 43 per cent or 88p to 297p – well above the proposed offer price. Chloride rejected the approach but analysts said there was still room for a new offer, possibly from a rival firm such as Ohio-based power firm Eaton.
The possibility of consolidation in the housebuilding sector, following interest in privately-owned Crest Nicholson from entrepreneur Hugh Osmond, lifted shares in several major players. Barratt Developments rose 5.8p to 137.7p and Bovis Homes added 8.8p to 449p.
But a positive trading statement from Redrow was treated with indifference by brokers, who said there was more value to be had elsewhere in the sector.
The Flintshire-based firm's shares lost earlier rises to end up 0.3p to 151.4p despite the group saying it would return to profit in the second half of the year.