By Tricia Wright
LONDON (Reuters) - Britain's top share index steadied after three straight days of falls on Monday, propped up by HSBC as investors bought into the bank's beaten-down shares after it posted first-half results.
The index heavyweight rose 0.9 percent in spite of a 12 percent drop in pretax profits in the six months to the end of June to $12.3 billion (9.17 billion pounds), just below analysts' forecasts.
Its shares initially dropped 2 percent after the results. But investors soon focused on the bank's balance sheet strength and an attractive dividend yield, and bought back into the shares, which have fallen some 17 percent from a peak in May 2013.
"The headline figures are negative ... but there are mitigating factors... A very strong balance sheet, and a dividend yield of nearly 5 percent which has got its obvious attractions in the current interest rate environment," Richard Hunter, head of equities at Hargreaves Lansdown, said.
"A 'strong hold' is the current (market) consensus. I can see some upgrades to that consensus, providing investors are prepared to take a longer view."
The broader FTSE 100 <.FTSE> closed down a minuscule 1.66 points at 6,677.52, having dropped 1.7 percent last week.
Intertek (L:ITRK), which tests goods to check they comply with regulatory standards, led blue chips higher with a 6.8 percent gain, bouncing off a two-year low hit last week, as it raised its interim dividend by 6.7 percent to 16 pence per share and said it was on track to deliver single-digit organic revenue growth.
Shares across the region fell sharply last week despite a second-quarter reporting season in which 53 percent of the 108 companies in the STOXX Europe 600 <.STOXX> have reported estimate-beating earnings so far, according to StarMine data.
Investor appetite has been sapped by the prospect that strong economic data is bringing a period of exceptionally loose U.S. monetary policy towards its close. International strains over Ukraine and Gaza are also keeping markets wary.
Charles Stanley's technical analyst Bill McNamara reckons the FTSE 100's downtrend will soon resume.
"I'm becoming concerned about its loss of momentum over recent sessions," McNamara said. "I remain very cautious on the UK market at the moment and my own sense is that we are going to see further weakness before we see it back up towards the high."
Among mid-caps, engineer Balfour Beatty (L:BALF) rose 1.8 percent after the Sunday Telegraph reported UK engineering firm WS Atkins (L:ATKW) and Canada's WSP Global (TO:WSP) are vying for control of its engineering and design business.
(Additional reporting by Francesco Canepa; Editing by Ruth Pitchford)