* FTSE 100 index up 0.2 percent 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, 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 up 0.8 percent and Centrica ahead 1.6 percent.
Precious metal groups also moved higher as the price of gold rallied to record highs on safe haven buying, and as the dollar weakened against the euro. Randgold Resources added 0.9 percent, while Fresnillo gained 1.2 percent.
Other miners were more mixed. Kazakhmys 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 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 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, which will issue a trading update on Wednesday, lost 0.4 percent.
TUI TRADING BOOST
TUI Travel 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 gained 1.7 percent, and airline British Airways 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)