Britain's top share index hit its highest close in 10 weeks on Monday, led by banks after European stress tests passed without major incident, and as strong economic data from the U.S. boosted investor confidence, according to Reuters. The FTSE 100 index ended up 0.7 percent, or 38.50 points, at 5,351.12, its highest closing level since May 13. Banks were the top performers as investors breathed a sigh of relief after the European bank stress tests published late on Friday unearthed no nasty surprises. Barclays rose 4.5 percent, and led the sector, which had come under pressure on Friday ahead of the results, with Lloyds Banking Group and Royal Bank of Scotland up 3.9 percent and 3 percent, respectively. Only seven of 91 banks tested -- five small Spanish banks, Germany's state-rescued Hypo Real Estate and Greece's ATEbank -- failed to satisfy the regulators, with an overall capital shortfall of just 3.5 billion euros ($4.5 billion). The shortfall was much smaller than the 30-100 billion euros predicted by markets, but there remained some scepticism that the stress tests on European banks were not strict enough. The FTSE 100 closed above its 50 percent Fibonacci retracement from a high in April to a low in June at 5,311.89 points, and also ended above its 200-day moving average of 5,328.80. "As important key levels have been breached on the upside, the opportunity for the bulls to lift the indices higher certainly stands a good chance. But there may be limits on how much further these markets may rise," said Sandy Jadeja, chief technical analyst at City Index. London's blue chips rallied further after data was released showing sales of new U.S. single-family homes rebounded strongly in June from the prior month's record low, cooling fears of a slowdown in recovery in the world's largest economy. BP SHUFFLES PACK BP rose 4.6 percent, with the oil major expected to install an American troubleshooter, Bob Dudley, as chief executive in the next 24 hours, replacing Tony Hayward, who has come under fire for his handling of the worst oil spill in U.S. history. "It's a political issue. That'll probably serve them well with a Yank in charge in the short term," one London-based trader said. Pearson was the top gainer, up 5.8 percent after the educational technology provider and Financial Times owner firmed up its full-year outlook after a strong first-half showing from all its units. Tullow Oil added 5.1 percent after the oil explorer said it had found a major new field off the coast of Ghana, raising hopes of further discoveries off West Africa. On the downside, gold miners African Barrick Gold's and Fresnillo fell 4.2 and 2.6 percent, respectively, as the price of gold continued its descent from recent all-time highs. ARM Holdings dropped 2.1 percent, shedding some of the gains it made on Friday after striking a new licensing agreement with Microsoft, as Panmure Gordon cut its rating to "sell" from "hold". GlaxoSmithKline fell 1.3 percent after the Wall Street Journal on Sunday reported that the drugmaker made a "very casual approach" to Genzyme Corp, asking to be notified if Genzyme put itself on the block. Peer AstraZeneca was also weak, losing 0.7 percent ahead of its second-quarter results due later this week.
