Banks and commodity stocks were the biggest gainers as Britain's top share index rose early on Monday, after Greece moved a step closer to securing an international bailout that will help the country avoid a messy default and a broader financial crisis.

London's blue chip index was up 49.91 points, or 0.9 percent at 5,902.30 by 11:20 SA time.

Banks, which fell 30 percent in 2011 as investors fretted that Europe's debt crisis could destroy balance sheets and bring about a credit crisis, were among the top gainers on Monday with Greece set to avoid a chaotic default that would threaten the financial system.

One hundred and ninety-nine of the 300 Greek lawmakers backed a bill that sets out 3.3 billion euros ($4.35 billion) of extra budget cuts for this year alone and provides for a bond swap to ease Greece's debt burden by cutting the real value of private-sector investors' bond holdings by some 70 percent.

It is hoped the bill will be enough to convince the European Union and the International Monetary Fund to release funds that will help Greece rollover debt due in March.

“Further down the track I think it is inevitable Greece will be forced to default, but given the fragility of the global financial system now it is not in anybody's interest to allow Greece to go under,” said Peter Dixon, global equities economist at Commerzbank.

Barclays was a strong performer in the UK banking sector, up 1.3 percent as RBC Capital Markets upped its target price on the UK lender and Oriel Securities repeated its “buy” rating on the firm after results on Friday.

With risk appetite back on among investors, miners and integrated oils rose too, as a deal for Greece would lift some of the uncertainty hanging over the outlook for global growth.

Anglo American bounced back from Friday's falls, rising 3.2 percent as Anglo American Platinum reported full year earnings.

The miners were also boosted by more M&A talk, following the announcement of the proposed merger between Glencore and Xstrata, as it was reported Canadian metals and coal miner Teck Resources may be building a stake in Australia's third-largest iron ore producer Fortescue Metal Group.

Analysts had hoped M&A would help support equity markets in 2011, but the euro zone debt crisis prompted cash rich companies to hoard rather than spend. Early 2012, however, has seen deals in the UK market begin to pick up, as those companies have finally started to splash the cash on firms with beaten down valuations. The FTSE 100 trades on a 12-month forward price to earnings of about 10.3 times, compared to a historical average of around 14 times, according to Thomson Reuters data.

Vodafone Group rose 1.0 percent after the world's largest mobile operator by revenue, said it was weighing an $1.1 billion offer for Britain's Cable & Wireless Worldwide, whose fixed-line network could boost bandwidth for its Internet hungry customers. Cable & Wireless Worldwide was up 28.8 percent.

Among the few fallers on the FTSE 100 were defensive stocks such as Rolls Royce, Reckitt Benckiser and Smith & Nephew as appetite for safer assets faded.

However, London's blue chip index continues to stall around a resistance level of about 5,900, which it has found difficult to convincingly breech since the start of February.

“The UK index has been unable to move through that level subsequently, despite trading up to 5,916 on a couple of occasions, and the bigger picture is that the FTSE looks like it might simply be running out of short-term upside momentum following an extremely strong run,” Bill McNamara, technical analyst at Charles Stanley, said.

He said the FTSE 100 needs to hold above the 5,785 level for the bull case to remain intact. - Reuters