* FTSE 100 up 0.5 pct
* Higher crude lifts oil stocks, hits airlines
* TUI sticks to forecasts, shares gain(Adds details, closing prices)
By Danilo Masoni
MILAN, Sept 27 (Reuters) - Britain's top share index rose onThursday to a four-week high, helped by a drop in sterling,while continued weakness in basic materials stocks weighed.
The FTSE 100 gained 0.5 percent as the pound washeld back by strength in the dollar following a U.S. rate hikeand investors remained nervous on the outcome of Brexit talks.
The index, whose companies make around 70 percent of theirtotal earnings from overseas, slightly outperformed the broaderEuropean market, which was weighed down by worries over Italy'sbudget.
Among the top FTSE gainers were tobacco group BAT,spirits maker Diageo and drugmaker Shire, whichall rose more than 1 percent.
Oil and gas stocks rose as crude prices werepushed higher by the prospect of tighter markets due to U.S.sanctions against major oil exporter Iran.
"Unless the U.S. releases reserves or OPEC commits tofurther output to plug the gap, oil could continue to crankhigher from here," said Markets.com analyst Neil Wilson.
Oil major BP was the biggest gainer in the sector, up1.2 percent, while Shell eased 0.1 percent.
Airlines suffered from the strength in crude prices.
EasyJet fell 2.6 percent, further hit by a pricetarget cut from Kepler Cheuvreux. British Airways owner IAGfell 0.6 percent but Ryanair added 0.3 percent.
Travel operator TUI rose 2.5 percent after thecompany said it was on track to meet its forecasts for earningsgrowth, shrugging off the impact of a hot summer in its maincustomer markets.
TUI rival Thomas Cook, which cut its profit forecastthis week blaming a heatwave in Europe, gained 1.6 percent.
"The nature of TUI's tour operating business, which is lessexposed to the late booking market where Thomas Cook suffered,and its greater exposure to the high growth and high margincruise ship business have helped the former perform better,"said Russ Mould, investment director at AJ Bell.
Miners were broadly lower as copper prices fell further. Thesector was the biggest weight to the FTSE on Thursday.
Mid-cap IG Group was a stand-out faller, down 12.8percent, after the online financial trading firm said its CEOPeter Hetherington would step down immediately.
Rival CMC Markets fell 2.2 percent. Both stockshave recently suffered sharp share price falls after weakresults and amid tighter regulatory scrutiny.
Shares of Indivior fell sharply for a secondstraight day, down 13 percent, as prospects for the Britishdrugmaker's new potential blockbuster drug waned.
(Reporting by Danilo Masoni; Editing by Gareth Jones and RobinPomeroy)
