HSBC, Europe's biggest banking group, posts first-quarter earnings news on Monday and a positive release could see the London stock market build on recent strong gains. The British capital's FTSE 100 index of leading shares closed up 5.16 percent, or 218.87 points, at 4,462.09 points on Friday from a week earlier.
That was the highest closing level since January 7 and up by almost 30 percent from the multi-year lows recorded in March amid the global financial crisis. Frankfurt and Paris also rallied Friday as markets were boosted by a stronger-than-expected assessment of big US banks and an encouraging jobs report in the United States.
HSBC, while escaping the need for a British government bailout, recently announced plans to raise 12.5 billion pounds (18 billion dollars, 13.7 billion euros) via a sale of new shares. The record rights issue was launched after HSBC's 2008 net profit plunged 70 percent because of the collapse of the US subprime or higher-risk home loan market - whose failure sparked the world-wide credit crunch.
"HSBC has been relatively resilient to the crisis up to now," New Edge analyst Daniel Roy wrote in a note to clients. "It is viewed by the market as one of the banks with the least risky balance sheet. The bank's retail exposure gives it a relatively reliable profile in times of turmoil.
"Nevertheless, we have seen that this is not enough to be immune to the crisis." On Friday meanwhile, shares in the state-controlled Royal Bank of Scotland closed up 13.94 percent at 47.40 pence as investors welcomed news it made a first-quarter net loss of only 857 million pounds.
The net loss, which was caused by massive write-offs linked to the credit crunch, compared with profit after tax of 245 million pounds in the first three months of 2008.
"RBS is a radically different organisation from just a year ago," said Richard Hunter, head of equities at stockbroker Hargreaves Lansdown. "A 70 percent-plus gain in the share price over the last three months underlines investors' new found trust in management and the bank's future.
"Nonetheless, management itself is stressing the magnitude of the task ahead, with the bank's future being closely tied to that of the UK economy." London investors will also follow the Bank of England's latest economic growth and inflation forecasts for Britain, due on Wednesday. The BoE surprised markets this week by announcing it would pump out another 50 billion pounds of new money to boost lending between British banks. The central bank also kept interest rates at a record-low 0.5 percent as Britain battles recession.
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