Britain's leading shares rose on Monday in thin volumes as comments by Barclays eased concerns over its financial health, helping to underpin financial stocks.

The FTSE 100 index closed 0.2 percent, or 11.9 points, higher at 6,315.2 with banks the best performing sector. The index ended at its highest close since August 8, in line with gains in European markets.

Barclays rose 4 percent, topping gainers, after its President Bob Diamond denied in newspaper interviews at the weekend the bank might be forced into a profit warning and repeated it does not expect material losses from highly leveraged vehicles known as SIV-lites.

Last week Barclays tapped the Bank of England's emergency reserves for the second time in two weeks.

Standard Chartered rose 1.7 percent while HBOS gained 1.5 percent.

HSBC was flat after it agreed to buy 51 percent of Korea Exchange Bank from private equity firm Lone Star for $6.3 billion.

Volumes in UK stocks were light, with U.S. markets closed for the Labor Day holiday.

On Friday, U.S. stocks rose as President George W. Bush and Federal Reserve Chairman Ben Bernanke reassured investors they would take steps to shelter the economy from a global credit squeeze.

The market you are seeing today is probably a bit of a follow through from a positive close on Wall Street on Friday, said Keith Bowman, UK equity analyst at Hargreaves Lansdown.

It does look as though the market is finding some comfort from Barclays' comments.

Investors are also bracing for interest rate decisions in Europe even though both the European Central Bank the Bank of England are widely expected to keep rates on hold.


Oil stocks, however, struggled even as oil prices firmed. One trader said the sector was paring gains after a good run last week and stocks were possibly feeling the pinch of results from Russia's TNK-BP.

Net profit of Russia's third-largest oil producer TNK-BP, half owned by BP, fell 30 percent in the first half of 2007.

BP was down 1.3 percent, Royal Dutch Shell eased 0.2 percent and BG Group gave up 1.6 percent.

Among gainers, nuclear power firm British Energy tacked on 1 percent with traders citing market talk the British government might sell its remaining stake in the company.

British Airways added 1.7 percent and Ryanair climbed 0.8 percent after upbeat analyst notes.

Analysts said August traffic figures due from BA on Wednesday were likely to be strong, compared with year-ago numbers that were hurt by security alerts in the UK.

Among mid-caps, Carphone Warehouse jumped 4.8 percent on market talk that U.S.-based electrical goods retailer Best Buy, with which it has a joint venture, was building a stake in the UK company. Carphone Warehouse and Best Buy were not available to comment.

(Additional reporting by UK Stocks team)