Banks and oils lead FTSE higher

By Jon Hopkins

LONDON (Reuters) - The top share index closed 2.3 percent higher on Monday propelled by gains in banks, with Lloyds Banking Group up after its chairman said he was to step down, and in energy stocks as oil prices rose.

By the close, the FTSE 100 was 98.34 points higher at 4,446.45 points, the session peak, having rallied from a low of 4,307.72.

"It's a good start to the week, boosted by Wall Street's rally in the afternoon, although volume was pretty weak with not a lot about for real direction aside from the Lloyds news," said Mic Mills, trader at spreadbetter ETX Capital.

U.S. blue chips rallied after sharp falls on Friday, up 1.9 percent by London's close with Bank of America gaining as Goldman Sachs upped its rating on the bank to "buy."

Banks added the most points to the FTSE 100 index led by Lloyds Banking Group, up 9.9 percent as favourable changes to the terms of a planned placing and open offer accompanied news its chairman would depart by June 2010.

Victor Blank is to step down as chairman of the group in the next year, following intense criticism of the part-nationalised British bank's purchase of troubled rival HBOS.

Lloyds also tweaked the terms of its 4 billion pound fundraising so as not to penalise small shareholders if they do not stump up more cash. Standard Chartered, HSBC, Barclays and RBS gained 4.4-8.5 percent.

Energy stocks pushed higher as oil prices rose to over $58 a barrel.