Britain's FTSE 100 index briefly hit a one-month high on Monday after Greek elections reduced the chances of an imminent euro exit, but gains were then capped by expectations the euro zone crisis is still far from resolved.

Greek conservatives secured a narrow victory over the radical left at the weekend, increasing the likelihood of Athens sticking to its international bailout terms and staying inside the single currency bloc.

But while investors deemed the results a positive for risk appetite, they remained concerned about problems in Italy and Spain and the election outcome was also seen reducing the chances of near-term stimulus action from global policymakers.

“This should have been seen as bullish for risk sentiment, but the fact that sentiment was very fleeting invokes the adage that a market that can't go up on bullish news is not bullish, so any rally is going to be very short-lived and we are looking to sell into that strength,” said Stewart Richardson, chief investment officer at RMG.

The FTSE 100 was up 0.3 percent, or 14.71 points, at 5,493.42 by 12:43 SA time, retreating from an intra-day peak of 5,555.32 set in early trading, its highest level in a month.

The 50-day moving average at around 5,549 and the 200-day line at 5,560 helped keep a lid on the gains.

“It looks like a fairly volatile day,” said Myrto Sokou, analyst at Sucden Financial. “There is high potential for a consolidation around 5,450 area, and if the market breaks 5,413 it has potential for further declines.”


Britain's position outside the euro zone enabled it to outshine the EuroSTOXX 50, which fell 0.2 percent.

“The UK has flexibility in terms of policy ... and they seem to be using it a little bit,” said Richardson, who favours UK and US shares over euro zone stocks.

“There are no pain-free options out there at the moment, clearly if Europe gets hit hard the UK is going to suffer but it might suffer a bit less so it's a relative value trade.”

He added that Britain's pledge last week to flood the banking system with more than 100 billion pounds ($155 billion) was “a small step in the right direction”.

On Monday, though, banking shares led the loser board on the FTSE 100, with traditionally volatile Lloyds down 1.4 percent and Royal Bank of Scotland off 2 percent as worries about the euro zone persisted.

Adding to the downside on Lloyds was a report in the Times newspaper that the bank is leaning increasingly towards a flotation of its 632-branch business known as Verde, as hopes fade that its preferred option of a sale will go ahead.

On the upside, heavyweight miners and energy stocks provided the biggest boost to the FTSE 100. - Reuters