* HSBC shares spiked 10 pct before erasing gains
* Traders say human error probably responsible
* LSE system kicked in to suspend share and avoid panic
* Identity of the responsible person not yet revealed (Adds details, comments)
By Steve Slater
LONDON, Jan 30 (Reuters) - A trader may have lost about400,000 pounds ($662,100) in under 30 seconds on Thursday aftercausing a 10 percent spike in the shares of Europe's biggestbank, HSBC, which traders blamed on human error - a"fat finger" trade.
The jump in the price - a seismic move in a company worthnearly 120 billion pounds - prompted a "circuit-breaker" to kickin and suspend HSBC shares from trading for five minutes, afterwhich an orderly market in its shares resumed.
The London Stock Exchange said its trading system worked asit should to prevent it sparking a panic.
An LSE spokesman said the spike, which briefly flipped theentire FTSE 100 index into positive territory, had beeninvestigated and no trades would be cancelled.
That would be unwelcome news for any fat-fingered tradersitting on a hefty loss.
Other traders said the person responsible may have input thewrong quantity of shares to buy or did not spread out the tradeover a sufficiently long period of time for it to be absorbed bythe market, and also probably failed to put in an upper pricelimit.
Trades are typically divided into small orders by complexalgorithms to get a better price. But these programme trades cantrigger other algorithm orders and have been criticised forexaggerating market moves.
"These things should never happen if it's done properly,that's why lots of controls are built into the systems. But itmay be the case that someone manually keyed in the algo andchanged some of the configuration," a trader said.
"There are various scenarios on what could have gone wrong.But the good thing is people shouldn't do it, and so gettingpenalised for doing it (by losing money) means they won't do itagain," he said.
The identity of the trader or company he or she worked forhas not been revealed.
The flurry of action in HSBC shares was sparked at 1120 GMTand 17 seconds, with an order for 18,049 shares at 629.3 pence,near where the price was trading.
Hundreds more orders in smaller amounts followed and droveHSBC's share price to 650 pence within 12 seconds, and then ashigh as 688 pence within another 16 seconds. The shares werethen suspended until 1126 GMT.
About 1.9 million shares traded during one minute. Thatcould have lost the trader about 400,000 pounds for his "fatfinger", based on an average price of 650 pence, though onetrader said it was likely other orders were triggered by theoriginal mistake so others may have shared that loss.
Algorithms - or what some have dubbed "the rise of themachine" - have been blamed for adding volatility and promptedexchanges and banks to increase controls, especially after a"flash crash" on Wall Street in May 2010, when the Dow fell more than 600 points in a matter of minutes, sparked by alarge seller creating an imbalance in the market.
Other stocks hit by fat-finger trades include U.S. securitysoftware firm Symantec and American Electric Power last year.
HSBC declined to comment on the move. By 1608 GMT its shareswere back at 630.7p, up a more modest 0.7 percent on the day. ($1 = 0.6041 British pounds) (Additional reporting by Tricia Wright, Toni Vorobyova andAlistair Smout; Editing by Will Waterman)