Financials, the broad sector which includes banks, insurers and asset managers, added 9 points to the FTSE 100 and ensured the blue-chip bourse finished in positive territory.

The solid gains, which resulted in Lloyds Banking Group adding 3.5 percent and Barclays 2 percent, also helped the STOXX Europe 600 Banking index to close up 0.1, as they were able to offset a 0.5 percent fall in euro zone banks index.

As this whole Greek situation starts to deteriorate, with concerns over delays to payments, you're seeing the peripheral banks getting beat up, Nick Xanders, head of European equity strategy at brokerage BTIG, said.

is outside the mess for the most part. The worst performers on the Euro STOXX 50 are the biggest Spanish banks. When they sell these things, investors look at where they're going to put their money into, and the U.K. becomes a safe-haven again.

The Greek parliament passed an austerity budget for 2013 late on Sunday, but the EU said it was not ready to authorise a new loan tranche on Monday, maintaining a position first staked out last week.

However, Athens was set to get two more years to achieve a primary budget surplus.

The FTSE 100 closed down just 2.41 points, or 0.04 percent, at 5,767.22, opening the week steady after losing 1.7 percent last week and outpeforming a 0.2 drop in the top European stocks.

The index hit a two-month low on Friday, probing the 200-day moving average level around 5,730, but after recovering that session it traded in a tight 35 point range on Monday.

Among the top gainers was Lloyds, who rose 3.5 on the session, in volume of over 150 percent of its 90-day average.

The bank has rallied 5.7 percent since the Federal Reserve announced on Friday that it did not expect proposed Basel III rules on banking regulation to be implemented in the United States by the Jan. 1, 2013 deadline.

Banks aside, there was little evidence that the appetite was there among investors to propel riskier stocks -- those which tend to rise more when economic condition improve and fall more in times of economic distress -- higher.

Miners shed 0.7 percent as the uncertainty in the euro zone compounded with weak GDP data from Japan to take the sheen off slightly better trade data from China.

Platinum producer Anglo American lost 2 percent, the largest faller in the FTSE 100, after it gave an update on the strikes in South Africa which have blighted production in its Amplats unit. The miner extended the deadline to 30,000 employees to accept their latest offer or face the sack.

Rather than betting on growth in high-beta stocks, stocks that offered high dividends continued to do well.

British American Tobacco rose 0.3 percent, bringing its gains for the month to 4.7 percent.

An attractive dividend also boosted car insurance firm Admiral, which led the index, gaining 3.6 percent, as it continuing a resurgence following a double upgrade by BofA/Merrill Lynch on Friday who cited the firm's dividend yield of over 9 percent.