Britain's FTSE hits 7-week high, led by Shire

* FTSE 100 index rises 0.6 percent

* Shire advances on report of new takeover bid

* BP up; raises dividend, promises more share buybacks

* St. James's Place gains on positive update

By Tricia Wright

LONDON, April 29 (Reuters) - Britain's top shares hit aseven-week high on Tuesday, bolstered by more deal news in thepharmaceuticals sector alongside upbeat corporate earningsreports from BP and wealth manager St. James's Place.

Shire climbed 4 percent, the top percentage gaineron the blue-chip FTSE 100 index, after Reuters reportedthat Botox-maker Allergan Inc was preparing a freshtakeover approach.

The UK drugmaker, which on Tuesday tested record highs hitin March, has advanced about 20 percent over the last two weeks,fuelled by speculation it been rebuffing approaches from U.S.rivals such as Allergan.

An upbeat results statement lifted BP 0.7 percentand, along with Shire, the oil major was one of the biggestpoints contributors to the UK benchmark as it raised itsquarterly dividend for the second time in six months and saidmore share buy-backs were on the cards.

British wealth manager St. James's Place, which saidit got off to a strong start in 2014, and hotel and coffee shopoperator Whitbread, which beat full-year profitforecasts, both gained 1 percent.

"Investors are waiting to see the start of some positiveearnings momentum, which has been missing in recent years. Anysign of a positive momentum is likely to support share prices,"James Butterfill, global equity strategist at Coutts, said.

"We are also witnessing the biggest indicative M&Aactivities since the credit crisis, highlighting that corporateconfidence is improving," he added.

The FTSE index was up 42.28 points, or 0.6 percent, at6,742.44 points, after hitting an intra-day peak of 6,751.06points, its highest level since early March.

Barclays Capital analyst Lynnden Branigan said that a closeabove the high seen on April 4, at 6,706, could pave the way forthe index to rise to the high seen on March 4, at 6,827. (Additional reporting by Atul Prakash Editing by Jeremy Gaunt.)