* Strong HSBC rights take up boosts banks
* Oils, miners track firmer commodity prices
* Defensive drugmakers down
By Dominic Lau
LONDON, April 6 (Reuters) - Britain's leading share index
was up 0.9 percent around midday on Monday, led higher by banks
after a strong response to HSBC's <HSBA.L> $18.9 billion rights
issue.
By 1019 GMT, the FTSE 100 <> was up 34.07 points at
4,063.74, after gaining 3.4 percent last week, though it is
still down 8.4 percent for the year after tumbling more than 31
percent in 2008.
"Enjoy the rally while you can," said David Buik, senior
strategist at BGC Partners, adding that any recovery would
require banking shares to perform, but some U.S. and European
banks may need to raise more capital.
"Stock markets tend to start to recover 18 months to two
years before the real economy does. What has happened in the
last two to three weeks doesn't come as any surprise. But ...
the market may be choppy in the next three months."
HSBC surged 4.6 percent after saying on Sunday its investors
bought 96.6 percent of the shares offered in its record rights
issue.
The news boosted sentiment in the banking sector, with
Barclays <BARC.L>, Royal Bank of Scotland <RBS.L>, Lloyds
Banking Group <LLOY.L> and Standard Chartered <STAN.L> rising
between 4 and 6.4 percent.
Improved sentiment about the outlook for the global and UK
economy lifted property companies. Land Securities <LAND.L>
topped the leaderboard, up 6.6 percent, and British Land
<BLND.L> added 5.1 percent.
"There has been lots of false optimism in all markets, and
risk remains elevated, but there are signs that the physical
property market is starting to respond," said Nomura property
analyst Mike Prew.
"After all, there is no shortage of equity or bonds, but
gold is scarce, and at $900/oz is the same price as one square
foot of prime London office space, which also pays you 7 percent
per annum," he said.
Oil producers were also firmer as crude prices <CLc1> traded
above $53 a barrel. BP <BP.L>, BG Group <BG.L> and Cairn Energy
<CNE.L> added between 0.6 and 1.9 percent.
Stronger base metal prices lifted miners, with Kazakhmys
<KAZ.L>, Antofagasta <ANTO.L>, Anglo American <AAL.L> and Lonmin
<LMI.L> up 2.6 to 5.8 percent.
But Rio Tinto <RIO.L> slipped 2.4 percent after the Sunday
Times said the miner had drawn up contingency plans to raise $8
billion in a rights issue.
BT Group <BT.L> advanced 5.4 percent after the same
newspaper said the telecoms firm was considering injecting its
remaining property assets, including BT Tower and its
headquarters close to St Paul's Cathedral in London, into its
pension fund as it tackles its deficit.
Drugmakers, defensive stocks that tend to underperform in a
rising market, were lower, with AstraZeneca <AZN.L> and
GlaxoSmithKline <GSK.L> down 0.9 and 2.7 percent, respectively.
"That jitteriness in financial markets has subsided somewhat
is visible across the board, in rising stock markets, falling
equity volatility, rising bond yields and a lower yen," Barclays
Wealth said in a note.
"Another signal is that markets seem more willing to take
weak but as-expected macro data such as Friday's payroll figures
in their stride, which was not the case in recent months."
(Additional reporting by Sinead Cruise and Simon Falush,
editing by Will Waterman)
