* HSBC falls on fundraising concerns
* Miners slip on weaker metal prices
* Tullow Oil rises on Ugandan oil find
* Defensive drugmakers in demand
By Dominic Lau
LONDON, Dec 16 (Reuters) - Britain's top share index ticked
up by midday on Tuesday ahead of the U.S. Federal Reserve's rate
decision, as defensive drugmakers rose but HSBC <HSBA.L> fell on
fundraising fears and soft metal prices hurt miners.
Drugmakers GlaxoSmithKline <GSK.L>, AstraZeneca <AZN.L> and
Shire <SHP.L> were up between 2.2 and 3.3 percent.
By 1134 GMT, the FTSE 100 <> was up 10.93 points at
4,288.33 after trading as low as 4,246.10 to as high as 4,329.62
earlier in the session.
"There is no real news today to drive the market one way or
another. We are still reeling from the Madoff situation," said
David Buik, strategist at BGC Partners.
"People are obviously very concerned that ... deflation is a
distinct possibility," Buik said. "We are waiting to find
whether it is 50 or 75 basis points (rate cut by the Fed)
today."
Banking giant HSBC <HSBA.L> shed 3.1 percent as talk swirled
it could have to raise up to $14 billion to rebuild capital,
dealers said. HSBC declined to comment.
Standard Chartered <STAN.L> and Royal Bank of Scotland were
also weak. But Barclays <BARC.L>, HBOS <HBOS.L> and Lloyds TSB
<LLOY.L> were up between 0.4 and 3.9 percent, ahead of the
release of Goldman Sachs <GS.N> quarterly results later in the
day.
The U.S. bank is expected to report a quarterly loss of as
much as $2.5 billion, hit by the falling value of many of its
investment.
The U.S. Federal Reserve is widely expected to cut interest
rates to just 0.5 percent or lower after the European market
close. Fed fund futures showed a 64 percent chance of a 75 basis
point cut to 0.25 percent.
In the UK, Bank of England Governor Mervyn King said
inflation could fall below 1 percent next year.
Inflation eased to 4.1 percent in November from 4.5 percent
in October but that is still well above the government's 2
percent target and required King to explain what action the BoE
plans to take to bring it back on track.
Miners were other underperformers, tracking weaker metal
prices. BHP Billiton <BLT.L>, Rio Tinto <RIO.L>, Vedanta
Resources <VED.L>, Lonmin <LMI.L> and Antofagasta <ANTO.L>
dropped between 5.2 and 6.6 percent.
Tullow Oil <TLW.L> and Heritage Oil <HOIL.L> announced a
"significant" new oil discovery at an exploration well in
Uganda. Tullow Oil soared 8.5 percent to top the FTSE 100
gainers and mid-cap Heritage Oil was up 9.4 percent.
Shares in British American Tobacco <BATS.L> put on 1.5
percent after RBS raised its 2008 and 2009 earnings per share
forecasts for the cigarette maker to reflect recent currency
moves.
"We see risks to equity performance in the short term and
stick to our current sector recommendations. We have a portfolio
positioning where we are cautious, but start to invest in a
recovery in the real economy in late 2009 by having an
overweight position in general retail," Cazenove said in a note.
"From a defensive perspective, we favour tobacco and
telecoms over healthcare and food producers and from a yield
perspective we favour the oil and gas sector."
(Editing by Victoria Bryan)
