By Carla Mozee, MarketWatch

U.K. stocks traded at record highs Monday, with HSBC PLC set for its strongest session in nearly two years following a report the company is looking at spinning off its U.K. retail bank.

The FTSE 100 gained 0.7% to 7,118.92, on track for its best closing level, as all sectors advanced. The blue-chip index's previous all-time closing high of 7,096.78 was logged on April 15, according to FactSet data.

Stocks turned higher with equities across Europe on the prospect that Greece's difficult negotiations with creditors may improve as the team handling the talks was revamped (http://www.marketwatch.com/story/greek-finance-minister-may-lose-influence-in-creditors-talks-2015-04-27) by Greek Prime Minister Alexis Tsipras. There are concerns that if Greece doesn't resolve its debt troubles, it may have to leave the eurozone.

Back in London, HSBC jumped 3.6%, its best gain since July 2013, after the Sunday Times reported that the lender is weighing a deal valued at 20 billion pounds ($30.4 billion) that would see it spin off its retail bank. HSBC said on Friday that it is thinking about moving its headquarters out of London (http://www.marketwatch.com/story/hsbc-considers-quitting-the-uk-2015-04-24) as it assesses changes in the U.K. regulatory landscape. A move out of London could prompt HSBC, which generates most of its revenue from Asia, to shed its British retail operations.

Some analysts noted that HSBC has previously denied speculation that it will rid itself of the U.K. retail assets. What's key this time around is it "shows that HSBC [is] considering all options to maximize value for shareholders," said Berenberg analyst James Chappell, in a note Monday.

"We continue to believe HSBC is undervalued considering its 6% yield and that there has been significant change already in the business," Chappell added.

Read: HSBC may ditch London, but most other banks likely to stay put (http://www.marketwatch.com/story/hsbc-may-ditch-london-but-dont-expect-a-flood-of-lenders-to-leave-2015-04-24).

Meanwhile, BP PLC (BP) shares were down 0.3% after the U.K. government told the oil giant that it would oppose any potential foreign takeover (http://www.marketwatch.com/story/bp-told-uk-government-would-oppose-a-foreign-takeover-2015-04-27) of the British heavyweight. As oil prices have slid, there is been speculation about possible deal-making involving BP. This month, Royal Dutch Shell PLC agreed to take over BG Group PLC .

Centrica shares turned higher, by 1.3%. The parent company of British Gas said it is trading in line with guidance (http://www.marketwatch.com/story/centrica-trading-in-line-with-guidance-2015-04-27-34853946), with colder-than-normal weather in the U.K. and North America leading to higher energy consumption.

Retailer Sports Direct International's shares also were up, gaining 2% after RBC Capital Markets raised its ratings the retailer to sector perform, from underperform. "Although we believe consensus EPS forecasts are too high owing to dollar-sourcing risk, valuation has corrected to more in line with historic averages and the sector," RBC said.

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