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 index climbed on Wednesday towards its highest level in nearly a month, lifted by gains at major banks and oil companies, although retailer Marks & Spencer (Other OTC: MAKSF - news) slumped after a trading update.

The blue-chip FTSE 100 index was up 0.6 percent at 6,258.85 points, near its highest level in around a month.

Banks across Europe rose after the euro zone gave Greece its firmest offer yet of debt relief in what finance ministers called a breakthrough deal, under which the IMF will return to taking part in the bailout for Athens.

"There is some good news for investors as it looks like they may not have to face another summer of high volatility with respect to Greece," said Naeem Aslam, chief market analyst at TF Global Markets UK Limited.

Royal Bank of Scotland (LSE: RBS.L - news) and HSBC Holdings (HKSE: 0005.HK - news) were the top gainers on the FTSE 100, up 3.8 percent and 3.2 percent 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 the worst-performing FTSE 100 stock in percentage terms.

M&S warned of a short-term hit to profit as it pushes through a plan to turn around its underperforming clothing and homeware business.

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

Product testing firm Intertek was also a notable faller, down 4.6 percent and hitting a one-month low after reporting softer organic growth.

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