Tried with linux-image-3.7.1-030701-generic from: 
http://kernel.ubuntu.com/~kernel-ppa/mainline/ and problem still exists.
Also tried old linux-image-3.4.24-030424-generic from the same source but still 
no luck.
Waking up from suspend always fixes the issue until next reboot.

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https://bugs.launchpad.net/bugs/1085168

Title:
  16 Bit colours / Banding on Intel HD4000

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