FTSE hits 10-week closing high as banks surge

* FTSE 100 up 0.3 pct

* Banks gain, helped by strong results from UBS

* U.S. consumer confidence dims

By Tricia Wright

LONDON, July 27 (Reuters) - Britain's top share index hit a 10-week closing high on Tuesday, as a buoyant banking sector boosted by strong results from Swiss lender UBS (UBSN.VX)(UBS.N) countered weak U.S. consumer confidence data.

The FTSE 100 .FTSE index closed up 14.55 points, or 0.3 percent, at 5,365.67, its highest closing level since May 13, having retreated from an intra-day peak of 5,411.45.

"We pulled back from the highs. The consumer confidence figures came in a touch weaker, and that's weighed on the market this afternoon," said Manoj Ladwa, senior trader at ETX Capital.

U.S. consumer confidence sank in July to its lowest since February on job market worries, underscoring the slow path to economic recovery. [ID:nN27260375]

"If it weren't for banks we'd be firmly in negative (territory)... UBS's results have propped up the sector today, and there's a general good feeling about banks, certainly after the stress tests last week, so we're seeing that continued knock-on effect," ETX's Ladwa said.

Banks were the standout gainers, with Lloyds Banking Group (LLOY.L), Royal Bank of Scotland (RBS.L) and Barclays (BARC.L) grabbing the top three spots on the blue-chip leader board, up between 7.6 and 8.8 percent.

Investors, still upbeat after the European bank stress tests published late on Friday unearthed no nasty surprises, cheered news that strong equities and currency revenues drove UBS's second-quarter net profit well above forecasts. [ID:nLDE66P0CS]

And news late on Monday that the Basel Committee will scale back many of its proposals to beef up bank capital and liquidity rules was also supporting the sector, signalling concessions in the face of lobbying by banks. [ID:nLDE66P1Z2]

Among individual movers, drugmaker AstraZeneca (AZN.L) rose 2 percent as U.S. Food and Drug Administration documents, released ahead of a July 28 advisory panel, raised hopes for its experimental blood thinner Brilinta. AstraZeneca is due to post second-quarter results on Thursday.

ENERGY DRAIN

Integrated oil stocks fell, weighed by BP (BP.L) which fell back after gains earlier in the session, shedding 2.6 percent, and pressured by a crude price CLc1 hit by the downbeat U.S. economic data.

BP said it would take a charge as a result of the Gulf of Mexico oil spill amounting to $32.2 billion, driving the firm to a second-quarter loss of $16.97 billion. [ID:nWLA9308].

It also confirmed Tony Hayward will step down as chief executive on Oct. 1 and be replaced by Robert Dudley, the U.S. executive managing BP's response to the spill.

Precious metals miners slipped as gold hit a twelve-week low, with Randgold Resources (RRS.L) among the top blue-chip fallers, shedding 4 percent.

African Barrick Gold (ABGL.L) fell 0.6 percent after it cut its full-year production guidance due to delays in accessing higher grade from its new Buzwagi mine in Tanzania.

Intercontinental Hotels (IHG.L) fell 7.4 percent after the billionaire Barclay brothers sold their 10.4 percent stake in the hotelier for 335 million pounds ($520 million). [ID:nLDE66Q0PZ]

And ARM Holdings (ARM.L) dropped 3.5 percent after the chip designer reported its second-quarter results and analysts struck a cautious note on the shares, citing valuation grounds after their recent strong performance.

"The major global stock indices are currently in something of a make or break area, which should make for an interesting few days," said Anthony Grech, head of research at IG Index.

"The Dow and the FTSE are within 1 percent or so of previous major highs over the last couple of months - highs at which positive sentiment has evaporated and shares have reversed," he said.

(Editing by Erica Billingham)