Britain's top shares managed modest gains on Friday, as high oil prices supported energy stocks and investors welcomed recent encouraging signs on the global economy.

Banks fell under the spotlight as Lloyds Banking Group posted a 3.5-billion pound ($5.5 billion) loss for 2011 and warned of lower revenue for 2012.

Lloyds, which hit a four-month closing high on Thursday after peer Royal Bank of Scotland unveiled its results, was left nursing a 1.2 percent drop.

Richard Hunter, head of equities at Hargreaves Lansdown, said Lloyds is a work in progress, adding the bank has a long way to go in its restructuring.

The situation at Lloyds remains complex and the outlook finely balanced. As such, it may well be the market consensus of the shares as a cautious buy may come under pressure, he said.

Ahead of the results, StarMine data showed 5 strong buy, 11 buy, 9 hold and 4 sell recommendations on Lloyds.

The forward 12-month price-earnings ratio for the stock is 14.9 times, against 15.4 for RBS, StarMine data to Thursday's close showed.

Heavyweight integrated oil stocks, led by a 0.9 percent advance in BP, added the most points to the FTSE 100 as Brent crude neared $124 a barrel on tensions in the Middle East.

The elevated oil price has left investors concerned equities are looking vulnerable, given the potential for margin pressure implied by rising commodity prices.

Goldman Sachs, however, saw only a limited impact on equities at this stage in the economic cycle. It reckoned that while higher prices will affect equities at the sector level, the broader market can cope with the current rise.

The UK benchmark was up 10.47 points, or 0.2 percent, at 5,948.36 by 1229 GMT.

Hammerson firmed 3.8 percent, the biggest blue-chip gainer, as the Anglo-French real estate developer accompanied above-forecast full-year results with plans to sell its entire office portfolio to focus on its retail property business in Britain and France.

A broker downgrade weighed on Reckitt Benckiser, off 1.9 percent and the second-heaviest FTSE 100 faller, with Goldman Sachs cutting its rating for the household products firm to neutral, citing valuation grounds.

Some analysts said the overall tone on the market was aided by the macroeconomic picture following recent upbeat U.S. data releases, which spurred hopes the world's biggest economy could help global growth.

Valentijn van Nieuwenhuijzen, head of strategy at ING Investment Management, reckoned equity markets have potential for further gains as we see the transition from a predominantly liquidity-fuelled rally to one governed by improvements surrounding expectations for global growth.

We are already seeing first signs of (improving economic data) so that's why we have become more positive on markets in general, and unless we get something more of a geopolitical shock I think we will transfer into a second phase, he said.

Van Nieuwenhuijzen saw 5-10 percent upside for the FTSE 100 over the coming months.

Technical analysis supported this upbeat view.

The FTSE 100, within striking distance of 6,000 after a near-7 percent rally this year, recently triggered a bullish technical signal known as a golden cross, as its 50-day moving average moved up through the 200-day average.

MAM fund manager Simon Callow was more cautious, believing much of the good news on the macro front to be already priced in.

Callow, manager of the CF Midas Balanced Growth Fund, which has 224 million pounds of assets under management, said the FTSE 100 could struggle to break through 6,000.

He highlighted that volume on the FTSE 100 has been thin since the start of the year, reflecting his own and other money managers' concerns about injecting cash into the market when fears about longer-term issues over European debt remained.