Stronger HSBC on relocation prospects boosts Britain's FTSE

* FTSE 100 up 0.5 pct; trades near record highs

* HSBC biggest FTSE boost as it considers move out of UK

* BAE rises as it reviews U.S. business

By Atul Prakash and Francesco Canepa

LONDON, April 24 (Reuters) - Britain's top share index climbed higher to trade just below a record peak on Friday, supported by gains in heavyweight HSBC after the global bank said it was considering moving its headquarters out of Britain for regulatory reasons.

The London-based bank rose 3.6 percent, the top gainer in the blue-chip FTSE 100 index, after it said its board had asked management to look at where is the best place to be based in light of new UK regulations, citing in particular the requirement to ringfence retail operations.

"Any such move could lessen their burden in terms of levies and additional taxes that have been applied to the UK banks," said Keith Bowman, equity analyst at Hargreaves Lansdown (LSE: HL.L - news) .

"We have also got some uncertainty of what the new UK government could bring."

With Britain's May 7 election now less than two weeks away, Prime Minister David Cameron's centre-right Conservatives and the centre-left Labour party are neck and neck in opinion polls, indicating that no single party will win a clear majority.

The FTSE 100 index gained 0.5 percent to 7,086.46 points by 1008 GMT, not far from a record high of 7,119.35 points set earlier this month. The broader market was supported by a 2.2 percent rise in the UK banking index on the back of gains recorded by HSBC.

The market was also helped by some other movers, with BAE Systems up 2.8 percent after Europe's biggest defence contractor said it had started an assessment of its U.S.-based manpower and services businesses in its Intelligence and Security divisions. It said they had generated a number of enquiries and external interest.

On the downside, AstraZeneca (NYSE: AZN - news) fell 3 percent after reporting a 6 percent drop in first-quarter sales, hit by the launch of generic copies of its popular stomach acid pill Nexium in the vital U.S. market and by the strong dollar.

Mid-cap Acacia Mining Plc rose about 4 percent as analysts at Credit Suisse (NYSE: CS - news) gave the stock an "outperform" rating even after the company reported an 18 percent fall in its first-quarter core profit.

"New (KOSDAQ: 160550.KQ - news) management's improving track record and strong focus on mine development give us confidence on project delivery," Credit Suisse analysts said in a note.

"We see scope for self-help to drive a re-rating (35 percent upside potential) on a six to 12-month view." (Editing by Gareth Jones)