The FTSE 100 ended the day 6.67 points higher at 5,777.65, slipping back after hitting an intra-day peak since June 2008 of 5,803.71 early in the session.
The UK blue-chip index is up 6.7 per cent this year, after gaining 22 per cent in 2009.
UK banks were in favour with sentiment lifted after a eurozone deal on a huge standby rescue package for Greece, which slashed the debt-laden country’s borrowing costs helping fears of a near-term default evaporate.
Barclays, HSBC, Royal Bank of Scotland and Lloyds Banking Group added 0.5 to 2.3 per cent
“We are grinding higher and the market is well supported as the Greece debacle seems to be contained,” said Philip Gillett, market strategist at IG Index, adding that the next serious technical resistance looks to be at around 6,200.
Energy stocks also lent support to the market as crude prices rose beyond $85 per barrel, BG Group and Royal Dutch Shell added 0.7 and 0.4 per cent, respectively.
Gains were quite widely dispersed. Home Retail Group was the standout blue-chip gainer, up 4.9 per cent after the Mail on Sunday newspaper said it might be a bid target for Wal Mart-owned grocer Asda.
Asda declined to comment on the Mail on Sunday report.