London close: UK markets hit two-month high as banks gain

- FTSE 100 at highest level since November 4th- Eurozone inflation ramps up interest-rate speculation- Banks helped by funding data- IAG reports strong December traffic figurestechMARK 2,789.43 -0.10%FTSE 100 6,755.45 +0.37%FTSE 250 16,069.19 +0.12% UK markets finished with decent gains on Tuesday as a decent performance by IAG and a host of banking stocks lifted the FTSE 100 to its highest level in over two months.A strong start on Wall Street also boosted stocks after the US trade deficit unexpectedly narrowed to a four-year low, while investors this side of the Atlantic welcomed an improvements in the Eurozone.A return to the debt markets for Ireland and lower unemployment figures for Germany were taken as signs that a recovery in the Eurozone is beginning to take hold. This gave a boost to sentiment that was felt in both bond and equity markets today.The FTSE 100 finished 24.72 points higher at 6,755.45, its highest closing level since November 4th.After a slow start this morning, the index pushed into positive territory as an unexpected dip in Eurozone inflation from 0.9% to 0.8% ramped up speculation ahead of a policy meeting in the region later this week. The fall, to further below the European Central Bank's (ECB) target of 2%, "will add to concerns that the region could suffer from a bout of deflation and increase the pressure on the ECB to take more action to support the economy", said Ben May, European Economist at Capital Economics."While the ECB may refrain from providing additional policy support on Thursday, we expect further action in the months ahead," May added.It's set to be a busy end of the week for financial markets with minutes of the latest Federal Reserve meeting due out on Wednesday, policy meetings in Europe and the UK on Thursday, and the all-important US jobs report due Friday.Banks gain, IAG jumps after traffic figuresBanking stocks were the best performers on Tuesday after Bank of England data showed that funding conditions for had improved in the fourth quarter of 2013. Lloyds has outperformed in recent sessions on increasing speculation that the company may restart dividend payments when it announces its 2013 results in March. HSBC, Royal Bank of Scotland and Barclays were also in demand.Airline group IAG raced ahead in afternoon trade after saying that group traffic increased by an impressive 10.6% year-on-year in December, helped by a first-time contribution from Vueling and strong growth at British Airways. Sector peer easyJet also finished higher after saying it carried 3.5% more passengers than a year ago in December.Construction equipment rental firm Ashtead was on the up after broker Jefferies hailed its growth potential in the US. Media groups ITV and BSkyB were also advancing after Jefferies upgraded the stocks to 'buy' and 'hold', respectively.Severn Trent, meanwhile, was hit by a downgrade by JPMorgan Cazenove to 'underweight' ahead of the upcoming regulatory review period.Precious metal miners Fresnillo and Randgold Resources were trading in the red as the price of gold and silver declined.Retailer Dunelm was a heavy faller today despite reporting that it returned to like-for-like growth in the second quarter following a tough start to the year. Analysts at broker Prime Markets warned that it sees a "period of consolidation for the shares" after a decent run over the last year.FTSE 100 - RisersInternational Consolidated Airlines Group SA (CDI) (IAG) 428.20p +3.43%Lloyds Banking Group (LLOY) 82.51p +3.00%Coca-Cola HBC AG (CDI) (CCH) 1,800.00p +2.62%Aviva (AV.) 454.20p +2.53%HSBC Holdings (HSBA) 675.80p +2.39%Old Mutual (OML) 193.30p +1.84%Ashtead Group (AHT) 804.00p +1.77%Royal Bank of Scotland Group (RBS) 350.40p +1.77%Standard Life (SL.) 365.80p +1.58%Land Securities Group (LAND) 976.50p +1.56%FTSE 100 - FallersFresnillo (FRES) 705.50p -4.08%Severn Trent (SVT) 1,667.00p -2.17%ARM Holdings (ARM) 1,055.00p -2.13%Rexam (REX) 505.50p -1.94%Royal Mail (RMG) 561.00p -1.92%Burberry Group (BRBY) 1,480.00p -1.66%Experian (EXPN) 1,102.00p -1.61%Rio Tinto (RIO) 3,215.00p -1.56%Centrica (CNA) 337.40p -1.49%Hargreaves Lansdown (HL.) 1,470.00p -1.41%FTSE 250 - RisersBank of Georgia Holdings (BGEO) 2,590.00p +5.71%Enterprise Inns (ETI) 157.20p +4.38%Pace (PIC) 332.70p +3.87%esure Group (ESUR) 259.40p +3.26%Diploma (DPLM) 744.50p +2.97%IP Group (IPO) 174.00p +2.96%Bodycote (BOY) 708.00p +2.83%Atkins (WS) (ATK) 1,465.00p +2.81%Keller Group (KLR) 1,222.00p +2.43%Greencore Group (GNC) 229.80p +2.36%FTSE 250 - FallersDunelm Group (DNLM) 942.50p -3.73%BBA Aviation (BBA) 311.70p -3.44%Bwin.party Digital Entertainment (BPTY) 120.70p -3.44%Renishaw (RSW) 2,045.00p -3.31%Centamin (DI) (CEY) 45.09p -3.14%Kenmare Resources (KMR) 19.16p -2.99%Imagination Technologies Group (IMG) 175.00p -2.56%Domino's Pizza Group (DOM) 503.00p -2.42%Elementis (ELM) 263.00p -2.30%Ferrexpo (FXPO) 179.90p -2.12%BC