Britain's FTSE climbs as banks and oil companies rise, M&S slumps

* Progress on Greek debt relief buoys European markets

* FTSE near 1-month high, up 0.6 pct

* M&S slumps after warning of short-term profit hit (Adds detail and updates prices)

By Kit Rees and Sudip Kar-Gupta

LONDON, May 25 (Reuters) - Britain's top shares indexclimbed on Wednesday towards its highest level in nearly amonth, lifted by gains at major banks and oil companies,although retailer Marks & Spencer slumped after atrading update.

The blue-chip FTSE 100 index was up 0.6 percent at6,258.85 points, near its highest level in around a month.

Banks across Europe rose after the euro zone gave Greece itsfirmest offer yet of debt relief in what finance ministerscalled a breakthrough deal, under which the IMF will return totaking part in the bailout for Athens.

"There is some good news for investors as it looks like theymay not have to face another summer of high volatility withrespect to Greece," said Naeem Aslam, chief market analyst at TFGlobal Markets UK Limited.

Royal Bank of Scotland and HSBC Holdings were the top gainers on the FTSE 100, up 3.8 percent and 3.2percent respectively.

Oil companies also rose as the price of oil edged towards$50 a barrel.

However, M&S slumped more than 8 percent, making it theworst-performing FTSE 100 stock in percentage terms.

M&S warned of a short-term hit to profit as it pushesthrough a plan to turn around its underperforming clothing andhomeware business.

"We still have concerns that the company will not be able toreverse the declines in general merchandise (GM) like-for-likesales while the rate of growth in general merchandise grossmargins is likely to slow," Cantor Fitzgerald analysts wrote ina note, keeping a "sell" rating on M&S shares.

Product testing firm Intertek was also a notablefaller, down 4.6 percent and hitting a one-month low afterreporting softer organic growth.

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Mike Dolan, Markets Editor EMEA. (Editing by Gareth Jones)