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]

"Focus is now on whether the synergies and cost cuts... can be sufficient to bring the strong growth that is needed to turn both businesses around," said Richard Griffiths, senior trader at Spreadex.

With no UK economic data due for release, investors' attention will be drawn to data from across the Atlantic, such as the September U.S. international trade figures at 1330 GMT and the University of Michigan consumer sentiment data for November at 1455 GMT.

Energy firms were mostly stronger, as crude prices edged up above $77 a barrel CLc1. BG Group (BG.L), Tullow Oil (TLW.L) and BP (BP.L) added 0.7-1.8 and 0.2 percent, respectively, but Royal Dutch Shell (RDSa.L) shed 0.7 percent.

Miners were also under pressure, retreating from gains earlier in the week as investors booked profits.

Kazakhmys (KAZ.L), Antofagasta (ANTO.L), Eurasian Natural Resources (ENRC.L) and Xstrata (XTA.L) were off between 1.5 and 2.1 percent.

Among individual stocks, the world's biggest drinks can maker, Rexam (REX.L), slipped 3.2 percent after the company said results in the second half of the year had been in line with expectations. [ID:nLD209130] (Additional reporting by Harpreet Bhal; editing by Simon Jessop)