* FTSE 100 index up 0.2 pct in thin volumes
* HSBC gain keeps bank sector higher; defensives supported
* TUI Travel boosted by reassuring trading update
By Jon Hopkins
LONDON, Oct 5 (Reuters) - Strength in banking and defensive
issues kept Britain's leading share index positive around
midday, but trading volumes were thin as investors looked ahead
to upcoming U.S. jobs data and corporate results.
At 1050 GMT the FTSE 100 <> was 10.63 points, or 0.2
percent higher at 5,566.60, after a 0.5 percent fall on Tuesday.
However, market volumes were only just over 21 percent of the
90-day average.
"Equities are as dull as dishwater this morning as the FTSE
trades within a 50-point range," said Manoj Ladwa, senior trader
at ETX Capital.
"Investors seem to be edging towards safety ... But this
could be the lull before the storm as traders await
third-quarter earnings and (U.S.) non-farm payrolls (employment
data) later in the week."
Banks were the best performing blue chips thanks mainly to
gains by heayweight HSBC <HSBA.L>, up 0.9 percent, as the sector
rallied from falls last week on fresh European debt concerns.
But defensively-perceived stocks such as drugmakers and
utilities saw increasing support, with GlaxoSmithKline <GSK.L>
up 0.8 percent and Centrica <CNA.L> ahead 1.6 percent.
Precious metal groups also moved higher as the price of gold
<XAU=> rallied to record highs on safe haven buying, and as the
dollar weakened against the euro. Randgold Resources <RRS.L>
added 0.9 percent, while Fresnillo <FRES.L> gained 1.2 percent.
Other miners were more mixed. Kazakhmys <KAZ.L> was a big
faller, down 2.6 percent after its chairman Vladimir Kim sold
around an 11 percent stake in the company to the Kazakh National
Welfare Fund, reducing his holding to 27.9 percent.
In reaction, Evolution Securities cut its rating on
Kazakhmys to "reduce" from "add".
Inmarsat <ISA.L> was the top FTSE 100 faller, losing 3.7
percent after U.S. hedge fund Harbinger Capital Partners said on
Tuesday it sold a 14.1 percent stake in the satellites operator
for around 410 million pounds. []
Also on the downside, Tesco <TSCO.L> hit profit-taking,
reversing early gains to shed 0.2 percent after the retailer
posted first-half results showing strong growth in Asia but a
sluggish performance in its main British market. []
Rival J Sainsbury <SBRY.L>, which will issue a trading
update on Wednesday, lost 0.4 percent.
TUI TRADING BOOST
TUI Travel <TT.L> was the top FTSE 100 gainer, up 4.7
percent after the tour operator said in a trading update that
summer 2010 trading went well, while trading for winter 2010/11
had further strengthened across all sectors.
Mid-cap rival Thomas Cook Group <TCG.L> gained 1.7 percent,
and airline British Airways <BAY.L> added 2.4 percent ahead of
September traffic numbers, due at 1315 GMT.
British services activity growth rose unexpectedly in
September from a 16-month low, but the outlook is poor with the
weakest inflow of new business in over a year, a Markit/CIPS
survey showed on Tuesday. []
The Bank of England's monetary policy committee meets later
this week, when it is expected to keep interest rates unchanged.
In a surprise move on Tuesday the Bank of Japan cut its
interest rates and pledged to keep rates at zero until prices
are seen stable. []
And Australia's central bank left interest rates on hold,
confounding expectations for a rise, though the central bank did
emphasise that higher rates would likely be needed in time to
contain inflation. []
(Editing by Greg Mahlich)
