FTSE hits 14-month closing high; HSBC advances

* FTSE 100 up 0.4 pct; hits 14-month closing high

* Heavyweight banks, miners, energy stocks gain

* HSBC climbs on dividend speculation

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

By David Brett

LONDON, Nov 13 (Reuters) - Britain's FTSE 100 .FTSE share index hit a 14-month closing high on Friday as gains in HSBC (HSBA.L) and commodity stocks outpaced weaker defensives, with British Airways (BAY.L) also up after agreeing to merger terms with Iberia.

The FTSE 100 ended up 19.88 points, or 0.4 percent, at 5,296.38 points -- the highest close since September 2008. The index is up 2.9 percent this week and has rebounded 53 percent since hitting a six-year trough in March.

Heavyweight bank HSBC, up 1.2 percent, added the most points to the index, with traders citing market 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.

Royal Bank of Scotland climbed 0.6 percent, but Barclays (BARC.L), Lloyds (LLOY.L) and Standard Chartered (STAN.L) fell 0.2 to 1.3 percent.

Energy firms were stronger as BofA-Merrill Lynch raised 2010 crude price CLc1 forecast to $85 a barrel [ID:nSP412045]. BG Group (BG.L), Cairn Energy (CNE.L), Tullow Oil (TLW.L) and BP (BP.L) added 0.5-2.1 percent.

"That 5,300 level is remaining elusive for the FTSE, although we do have a couple of high profile fundamentals out at the start of next week," said Anthony Grech, market strategist at IG Index.

"U.S. retail sales figures on Monday and UK inflation data on Tuesday both have the potential to add further evidence of economic recovery, but again any shortfall could leave traders itching to book profits," he added.

Miners were higher, with Anglo American (AAL.L), BHP Billiton (BLT.L) and Rio Tinto (RIO.L) rising 1 to 1.1 percent.

Real estate issues were on investors' wanted lists. British Land (BLND.L), Hammerson HMO.L, Land Securities (LAND.L) and Liberty International (LII.L) gained 2.3 to 3.9 percent.

"Large cap property companies are outperforming today in anticipation of positive numbers from British Land on Tuesday," said Manoj Ladwa, senior trader at ETX Capital.

DEFENSIVE SHARES DOWN

Defensively perceived stocks, however, lost ground. Pharmaceutical giant GlaxoSmithKline (GSK.L) shed 0.6 percent, while consumer goods firm Unilever (ULVR.L) lost 0.7 percent.

British Airways climbed 0.9 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]

In macroeconomic news, U.S. consumer sentiment fell in early November amid a grim outlook for future job prospects, although separate data showing rising imports in September raised some hopes of renewed U.S. economic growth. [ID:nSP412045]

Among individual stocks, the world's biggest drinks can maker Rexam (REX.L) slipped 1.7 percent after the company said results in the second half of the year had been in line with expectations. [ID:nLD209130] (Editing by Greg Mahlich)