By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- Shares of BP PLC helped push the U.K.'s FTSE 100 higher on Tuesday after the oil giant raised its dividend, while the broader stock market rebounded from the prior session's slide.

The benchmark stock index added 0.7% to 6,407.25, setting it on track to break a two-session losing streak. On Monday, the index dropped 0.4%, with banks sliding after European stress-test results.

BP (BP) posted one of the biggest gains on Tuesday, up 1.1%, after the energy major said it will raise dividends for the third quarter to 10 cents, a 5.3% increase on the year. The company also said the Russian sanctions have had no material impact on the company, although it has felt a squeeze from the falling ruble.

Other oil firms also moved higher, with shares of Royal Dutch Shell PLC (RDSB) up 0.6% and BG Group PLC edging up 0.1%. Shell reports earnings on Thursday.

Lloyds Banking Group PLC (LYG) dropped 1.8% after the bank took another 900 million pound ($1.45 billion) hit to cover compensation for mis-selling loan insurance, known as payment protection insurance, or PPI. On a more upbeat note, the lender reported a rise in third-quarter underlying profit.

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