The London market made cautious gains yesterday after Spain secured its first bailout payment for its banks and was given extra breathing space to meet its fiscal targets.
The FTSE-100 index closed 36.74 points higher at 5664.07 as the country's government was told it could bring its fiscal deficit down to 2.8% by 2014, rather than the original target of 3% by next year.
A £23 billion payment was agreed for the Spanish Government to support the country's struggling banks, which could climb to as high as £80bn in the months ahead.
In the City, Marks & Spencer was in focus after the retail giant unveiled a major shake-up of its board in a bid to ease concerns over recent lacklustre trading.
The pound continued to climb against the battered euro to 1.26 but slipped against the US dollar to 1.54.
The Footsie miners benefited from the improved sentiment in Europe with Vedanta Resources climbing 19p to 916.5p, Kazakhmys adding 6.5p to 723p and Xstrata rising 10.9p to 826.5p.
M&S advanced more than 2% after chief executive Marc Bolland sprung a surprise in the City by appointing former Debenhams and Jaeger chief executive Belinda Earl as style director and announcing the departure of clothing head Kate Bostock.
The changes offset a 6.8% decline in clothing and general merchandise sales in the 13 weeks to June 30 and helped the shares rise 6.8p to 327.8p.
By contrast, shares in online retailer ASOS jumped more than 13% – up 211p to 1855p – after an 8% rise in UK quarterly sales.
Next benefited from the ASOS update as its shares rose 1%, or 21p, to £31.91.
Meanwhile, Burberry recovered from a difficult session, up 29p to 1284p as investors looked towards today's trading update from the luxury goods group.
A shortened fallers board was topped by catering group Compass after third-quarter trading figures from France's Sodexho disappointed markets, triggering a fall of 13.5p to 656p.
It was joined on the way down by utilities Severn Trent and United after ministers raised the possibility of households being able to shop around for water supplies.
Shares in the Footsie pair were 4p and 2.5p lower at 1695p and 679p respectively.
The biggest Footsie risers were Prudential up 24p at 753.5p, GKN ahead 6.8p at 215.5p, Amec up 32p at 1052p and BAE Systems ahead 8.1p at 305p.
The biggest fallers were ARM Holdings down 15.4p at 480.5p, GlaxoSmithKline off 42p at 1454p, and Johnson Matthey losing 27p to close at 2167p.
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