* FTSE 100 gains 0.6 percent
* Longest winning streak for index since October
* Index just 1.6 percent off of 2013 high
* BSkyB gives away early gains after bid speculation
By Alistair Smout
LONDON, Dec 27 (Reuters) - Britain's top share index rose onFriday, taking its cue from fresh all-time highs hit on WallStreet to notch up its sixth straight day of gains, its longestwinning streak in two months.
The FTSE 100 was up 40.50 points, or 0.6 percent, at6,734.67 points by 1106 GMT, after both the Dow Jones andthe S&P 500 scaled record highs on Thursday, when the UKmarket was shut for the Boxing Day holiday.
The rise made it the UK benchmark's longest winning streaksince October, fuelled by optimism that the U.S. economy isstrong enough to withstand the gradual withdrawal of monetarystimulus. The FTSE 100 has risen nearly 5 percent from lastweek's low.
"The Santa rally came late but now the FTSE is grabbing holdof the Dow and the DAX and getting pulled along," said WillHedden, sales trader at IG. The German DAX hit anall-time high on Friday.
In another positive sign for economic growth in the world'slargest economy, U.S. jobless claims fell more than expected onThursday. This followed robust U.S. durable goods orders datareleased on Dec. 24.
The gains leave the FTSE 1.6 percent off the 2013 closinghigh at 6,840, which was a 13 year high and only just over 100points from an all time high.
"It feels like only a matter of time before we surpass theOctober high, and might make it there before New Year. Then withthe all time high around 6,950, it seems reasonable that thiscould be hit during the first quarter of 2014," IG's Heddensaid.
Traders saw scope for the UK benchmark to continue itsascent into 2014.
"It remains versus historical valuations still undervalued,and with the FTSE still lagging behind the EU markets we seerelative outperformance into the first quarter of 2014," saidAtif Latif, director of trading at Guardian Stockbrokers.
The FTSE 100 trades on a 12-month forward price/earningsratio of 12.4 times, against its 15-year average of 14.6 times,Thomson Reuters Datastream shows. The index, up some 14 percentin 2013, has lagged a near 17 percent rise on the pan-EuropeanSTOXX Europe 600.
Sectors sensitive to optimism over the economy, such asminers and banks, were among the top gainers.
In a thin session of trade, BSkyB was among the mostheavily traded stocks, trading 37.5 percent its 90-day averagevolume, compared to an average of 12 percent across the index.
The stock had been among the top gainers on the FTSE 100,with traders citing takeover speculation in a Daily Mail marketreport, but it gave away early gains to trade just 0.4 percenthigher.
Vodafone (VOD)