HSBC shares rise after strong cashcall

By Tony Munroe and Steve Slater

HONG KONG/LONDON (Reuters) - HSBC's 12.9 billion pound rights issue received a robust response from investors and leftover shares sold quickly, sending its shares up by more than 5 percent on Monday.

Some 96.6 percent of shares were taken in the offer and bankers sold the remaining 172.7 million shares not taken up -- or the "rump" -- early on Monday at 448 pence each in London and $51.83 each in Hong Kong.

That brought in 12.5 billion pounds for HSBC net of fees and expenses, which are expected to top 400 million pounds.

The third biggest rights issue ever in dollar terms will help HSBC weather losses in its troubled U.S. business and restore its capital advantage over rivals after an extended global financial crisis.

It will boost its ability to grab profitable business from banks in trouble and help it pursue bolt-on acquisitions in Asia and other emerging markets.

HSBC's London-listed shares were up 1.6 percent at 441.5 pence at 2:15 p.m., after an early rally to 463.5p fizzled out. The stock was one of the strongest performers in a weaker European bank sector, despite the placing.

The "rump" was almost five-times covered, one person familiar with the matter said. The placing was at about a 2 percent discount to the price when the book closed.

"The markedly improved global investor sentiment post-G20 and the slew of strong U.S. data in recent days have helped HSBC to a great extent," said Alex Tang, research director at Core Pacific-Yamaichi International. Tang called the response to HSBC's cash call "excellent."