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* UK's top share index up 1.4 pct at close
* RBS leads banks higher
* Old Mutual gains after confirming approaches for stake
* Coca-Cola HBC hit by stake sale (Updates prices at close)
By Kit Rees and Alistair Smout
LONDON, May 24 (Reuters) - Britain's top share index rose onTuesday, bolstered by a rally in banking stocks and awell-received trading statement from Kingfisher.
The FTSE 100 index was up 82.83 points, or 1.4percent, at 6,219.26 points at its close, touching a three-weekhigh.
The rally was broad-based, with grocer Tesco, OldMutual, Legal & General and Royal Bank ofScotland and all gaining between 4.8 percent and 6.8percent.
Royal Bank of Scotland rose after a U.S. appealscourt voided a Bank of America Corp mortgage penalty.
Investors said this could mean that the U.S. Department ofJustice might now relax its stance on mortgage settlements.
RBS is preparing for the biggest fines in its history tosettle U.S. investigations into accusations that it misledinvestors in mortgage-backed securities.
Analysts also said that the UK banking sector,which rose 2.4 percent, was boosted by readacross from a 9percent rise in underlying profit at Nationwide BuildingSociety, Britain's biggest customer-owned lender, as mortgagelending increased to volumes last seen before the 2007-08financial crisis.
"UK banks are once again in demand, with a reported rise inmortgage activity at Nationwide further enhancing theattractiveness of names like RBS," Chris Beauchamp, seniormarket analyst at IG, said in a note.
Financial services firm Old Mutual rallied 5.9percent after confirming it had received multiple approachesfrom potential buyers of its stake in U.S. fund firm Old MutualAsset Management (OMAM).
Kingfisher rose 3.5 percent, among top gainers after theowner of the B&Q chain reported a 3.6 percent increase inlike-for-like sales in the first three months of its financialyear. Traders said its UK and French divisions had performedbetter than expected.
"In its first half-year, it is a little early to be judgingthe returns from the five-year 'One Kingfisher' strategy butmanagement is pleased with progress so far," David Stoddart,analyst at Edison Investment Research, said in a note.
Tobacco firm Imperial Brands rose 3 percent,benefiting from an upgrade by Barclays to "overweight" from"equal weight".
"Imperial is executing strongly. Organic sales momentum isimproving and margin/cash generation increases underpin (atleast) 10 percent dividend growth," analysts at Barclays said ina note.
"Moreover, we are increasingly confident margins willsurprise to the upside and that the U.S. is performing ahead ofexpectations."
Coca-Cola HBC, however, was among the top fallers,down 3 percent after a shareholder said it was going to sell its1.5 percent stake in the bottling company.
ADVISORY- Reuters plans to replace intra-day European and UKstock market reports with a Live Markets blog on Eikon (see cpurl://apps.cp./cms/?pageId=livemarkets for site in development). In a real-time, multimedia formatfrom 0600 London time through the 1630 closing bell, it willinclude the best of our market reporting, Stocks Buzz service,Eikon graphics, Reuters pictures, eye-catching research andmarket zeitgeist. Breaking news and dramatic market moves willcontinue to be alerted to all clients and we will continue toprovide a short opening story and comprehensive closing reports.
If you have any thoughts, suggestions orfeedback on this, please email mike.dolan@thomsonreuters.com.
Mike Dolan, Markets Editor EMEA. (Reporting by Alistair Smout; Editing by Richard Balmforth)
