The FTSE closed modestly higher on Thursday, supported by oil and banking stocks after BG Group
The FTSE 100 <.FTSE> closed 19.54 points or 0.3 percent higher at 5,895.47 after hitting a six-month intraday high of 5,916.31 in the afternoon, when Greek political leaders agreed on reforms required to receive a new rescue package and the European Central Bank opened the door to helping Athens.
Banking stocks <.FTNMX8350> extended gains after the announcements as the prospect of a disorderly default by Greece receded.
But the sector pulled back in late trade and the FTSE fell back into the tight range seen this week, with volume just slightly above the anaemic average of the last 90 days.
As it had such a great run last week, you're seeing some rotation, some people taking profit, others eager to get in because they saw the break of the trendline, said Anders Sderberg, chief technical analyst at SEB Merchant Banking.
The market will try to be higher but it will fail and fall back to check and probably validate the trendline that we saw last week.
The FTSE 100 broke above a trendline at around 5,817 on Friday, when it hit a six-month closing high of 5,901.07. The index has traded in a narrow range of between 5,850.49 and 5,916.31 since then.
Traders said the price consolidation and thin trading volume signalled investors were reluctant to build on last week's rally with so much uncertainty still surrounding the euro zone's debt crisis and Europe's growth prospects.
The market is doing well and we're officially in bull market territory but I think that at this level it needs a little bit more volume, said Andy Ash, head of sales at Monument Securities.
He added a number of institutions and hedge funds were preferring high-yielding credit to equities and argued it would take a solid second long-term refinancing operation (LTRO) by the ECB to provide banks with more money and reassuring economic data out of Europe later this month to convince them to go back into shares.
His views echoed those of David Coombs, head of multi asset investment at Rathbones, who used part of the cash hoarded in 2011 to buy credit.
The fund manager, who manages around 100 million pounds across three funds of funds, said he remained sanguine on equities although the recent rally had moderated his bullish stance.
He favoured oil stocks, which he saw as poised to benefit from a high crude price environment, underpinned by encouraging economic growth prospects in emerging markets and the threat of further tensions between oil rich Iran and the West.
British oil and gas giant BG Group
Curbing gains on the index were miners <.FTNMX1770>, which fell 0.3 percent after Rio Tinto
Tate & Lyle
Among other chip fallers after results and trading updates on Wednesday, engine maker Rolls-Royce
(Editing by Greg Mahlich)