By Sara Sjolin, MarketWatch LONDON (MarketWatch)—British stocks hovered around the flat line in volatile trade on Tuesday, as Diageo PLC and oil firms were on the rise, but losses for banks and miners kept gains at bay. The FTSE 100 index UK:UKX +0.20% rose 0.1% to 5,842.18. Diageo UK:DGE +1.60% DEO +0.59% posted one of the biggest gains in the index, up 1.7%, after the drinks maker confirmed it’s in talks to buy a stake in India’s United Spirits Ltd. IN:532432 +8.89% . The two companies said in a joint statement that there is no certainty that these discussions will lead to a transaction. See: United Spirits in talks to sell stake to Diageo. Shares of United Spirits were up 3.4% in India. Oil firms further boosted the U.K. index, tracking gains for oil prices. See: Oil futures rebound in electronic trading. BP PLC UK:BP +0.86% BP +0.60% gained 0.6%, while BG Group PLC UK:BG +1.04% added 0.8%. Banks, however, followed the trend from the broader European financial sector and headed lower. Standard Chartered PLC UK:STAN -2.43% lost 2.8%, Royal Bank of Scotland Group PLC UK:RBS -0.30% RBS -1.35% fell 1% and HSBC Holdings PLC UK:HSBA -0.26% HBC -0.17% HK:5 +0.41% slipped 0.3%. Mining firms also added pressure in London, shaking off positive trading trends for most metals. Rio Tinto PLC UK:RIO -1.09% RIO -2.45% AU:RIO -1.82% fell 1.2%, Xstrata PLC UK:XTA -1.77% dropped 1.9% and BHP Billiton PLC UK:BLT -0.23% BHP -0.81% AU:BHP -0.48% nudged 0.5% lower. Sara Sjolin is a MarketWatch reporter, based in London.

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