FTSE up for 3rd day, HSBC, British Airways firmer

* FTSE 100 up 0.2 pct

* Gains in banks offsets weakness in miners and energy firms

* BA up after it agrees to merger terms with Spain's Iberia

By Simon Falush

LONDON, Nov 13 (Reuters) - Gains in HSBC (HSBA.L) and energy stocks kept Britain's top share index in positive ground for a third day on Friday, offsetting weaker defensives, while British Airways (BAY.L) rose after agreeing a merger with Iberia.

By 1204 GMT the FTSE 100 .FTSE was up 10.82 points at 5,287.32 points, a day after closing at a three-week high. It is on track for its highest close since September 2008.

The index is up 2.7 percent this week and has rebounded 53 percent since hitting a six-year trough in March.

Analysts were confident that the gains were sustainable.

"We will hang on to the explosive gains in the last six months given the speed and strength of the macro economic recovery and corporate recovery, the low interest rate environment and undemanding equity valuations," said Henk Potts, strategist at Barclays Wealth.

Heavyweight bank HSBC, up 1.3 percent, was the stock that added the most points to the index, with traders citing talk that it may increase its dividend.

The stock is up 8.5 percent this week, with investors cheered by strong results released on Tuesday.

Other banks were weaker. Barclays (BARC.L) fell 0.3 percent while Lloyds Banking Group (LLOY.L) and Standard Chartered (STAN.L) fell 0.2 and 0.4 percent, respectively.

BA HIGHER

British Airways climbed 1.6 percent, following its announcement on Thursday of a preliminary agreement for a $7 billion merger with Spain's Iberia (IBLA.MC) to create the world's third-largest airline by revenue. [ID:nLC092017]