HSBC boosts bruised FTSE after results

Mon Aug 4, 2014 10:55am EDT

* FTSE 100 up 0.2 pct; HSBC adds most points

* Intertek recovers poise, boosted by dividend hike

* Technical buying helps buoy index after sharp drop

By Tricia Wright

LONDON, Aug 4 (Reuters) - Britain's top share index halted a three-day losing streak on Monday, bolstered by HSBC as investors bought into the bank's beaten-down shares after it posted first-half results.

HSBC rose 1.1 percent, accounting for nearly half of the FTSE 100's points gain, in spite of a 12 percent drop in pretax profits in the six months to the end of June to $12.3 billion, just below analysts' forecasts.

HSBC shares initially dropped 2 percent after the results. But they soon gathered steam as investors focused on its positives, namely ongoing balance sheet strength and an attractive dividend yield, and bought back into the shares which have fallen some 17 percent from a peak in May 2013.

"The headline figures are negative ... but there are mitigating factors... A very strong balance sheet, and a dividend yield of nearly 5 percent which has got its obvious attractions in the current interest rate environment," Richard Hunter, head of equities at Hargreaves Lansdown, said.

"A 'strong hold' is the current (market) consensus. I can see some upgrades to that consensus, providing investors are prepared to take a longer view."

Gains were seen across the banking sector, with Lloyds Banking Group up 0.6 percent, Royal Bank of Scotland 0.8 percent firmer, and Barclays up 0.3 percent.

The broader FTSE 100 was up 12.46 points, or 0.2 percent, at 6,691.64 points by 1416 GMT, recovering after a 1.7 percent drop last week. It was also helped by technical buying, having climbed above a major support level on Friday - its 52-week moving average of 6,670 points.

Intertek, which tests goods to check they comply with regulatory standards, led blue chips higher with a 7 percent gain as it raised its interim dividend by 6.7 percent to 16 pence per share and said it was on track to deliver single-digit organic revenue growth.

Shares across the region fell sharply last week, despite a second-quarter reporting season that has seen 53 percent of the 108 companies in the STOXX Europe 600 reporting estimate-beating earnings, according to StarMine data.

Investor appetite has been sapped by the prospect of a tightening in U.S. monetary policy following strong data, as well as by geopolitical concerns ranging from tensions between Russia and the West over Ukraine to Israel's shelling of Gaza.

Charles Stanley's technical analyst Bill McNamara reckons the FTSE 100's downtrend will soon resume.

"I'm becoming concerned about its loss of momentum over recent sessions," McNamara said. "I remain very cautious on the UK market at the moment and my own sense is that we are going to see further weakness before we see it back up towards the high."

Among mid-caps, engineer Balfour Beatty rose 2.5 percent after the Sunday Telegraph reported UK engineering firm WS Atkins and Canada's WSP Global are vying for control of its engineering and design business. (Additional reporting by Francesco Canepa; Editing by Susan Fenton)