Banks and energy stocks, buoyed by hopes of a second bailout for Greece, helped Britain's FTSE 100 higher on Tuesday, but traders remained concerned about buying momentum in the short-term. "Uncertainty for the near term outlook still remains bearish until the markets can pick up positive momentum and clear hurdles to give the bulls a chance to see higher prices for June," Sandy Jadeja, chief technical Analyst at City Index said.
The FTSE 100 closed up 51.12 points, or 0.9 percent, at 5,9899.99, but drifted away from a session high of 6,009.98. The index fell 1.3 percent in May. "Although the first few days of June look positive it will be the closing prices for the week ahead that may provide a clue for the monthly outlook," Jadeja said, warning the FTSE had formed a double top at around 6,100, signalling the potential for further declines.
Banks were higher as Europe stepped up efforts to draft a second bailout package for Greece. Standard Chartered rose 1.4 percent as Nomura upgraded the bank to "buy". But Lloyds retreated 1.4 percent, with traders citing concerns over the bank placing its bonus scheme under review, potentially driving away the bank's top talent.
Traders also said there were worries, sparked by newspaper reports, of a return to high-risk mortgage lending, raising fears of the potential for another credit crunch scenario. The euro climbed to a three-week high against the dollar, as European officials met in Vienna to sketch out options for another bailout package.
The weak dollar lifted crude oil prices, which boosted integrated oils, but BG Group fell 0.3 percent, as Credit Suisse cut its target price for the firm. Plumbing supplies firm Wolseley climbed 3.4 percent, ahead of its trading update on Wednesday. The company was also boosted after the Sunday Times reported the plumbing supplies firm has put three of its UK businesses - Build Center, Electric Center and Encon - up for sale.
Industrial conglomerate Johnson Matthey found support ahead of results on Thursday, rising 4.6 percent. "We expect 2011 to be Johnson Matthey's best year so far," RBS said in a note, adding it sees margins in the second-half of 2011 at 16.2 percent, up about 40 basis points compared to the first-half of 2011.
Broker support helped lift Experian 3.1 percent, as Credit Suisse raised its rating for the credit checking firm to "outperform" from "neutral". Bullish broker comment buoyed motor insurer Admiral Group. The firm's shares rose 2.1 percent as Collins Stewart repeated its "buy" rating following last week's decision by the UK regulator against a total ban on referral fees. Serco rose 3.5 percent after the London-based outsourcer agreed to buy Indian private sector outsourcing company Intelenet for up to 385 million pounds ($634.4 million), which brokers view as expensive but strategically significant.