Motor insurers help Britain's FTSE edge higher

* Blue-chip FTSE 100 gains 0.2 percent

* Motor insurers up on news of higher premiums

* British American Tobacco (LSE: BATS.L - news) slips after update

By Atul Prakash

LONDON, Oct 22 (Reuters) - Britain's top share index edged higher late on Wednesday, with motor insurers advancing on news of a rise in car premiums and drugmaker GlaxoSmithKline gaining after its results.

GlaxoSmithKline (Other OTC: GLAXF - news) , up 3.9 percent, was the top gainer in the FTSE 100 index after setting out a bold recovery plan, including an initial public offering of part of its HIV and AIDS drugs business. It recorded core earnings per share (EPS) of 27.9 pence, against expectations of 23.9 pence.

The UK non-life insurance index rose 1.4 percent after motoring group AA said the price of car insurance had risen for the first time since early 2012.

Shares (Berlin: DI6.BE - news) in Admiral rose 2.7 percent, while Direct Line, Britain's largest car insurer, gained 3.3 percent and mid-cap esure Group was up 7.2 percent.

"Pricing power is not common in a low-growth world, so any industry that displays it is likely to attract investor interest," Robert Parkes, director of equity strategy at HSBC, said.

"This appears to be the case for insurance. The sector is being well supported by positive earnings momentum and a premium yield."

The blue-chip FTSE 100 index was up 0.2 percent at 6,387.52 points by 1433 GMT. The benchmark had fallen more than 10 percent in four weeks before making a marginal recovery since late last week.

Gains were partly offset by a fall in British American Tobacco after a trading update.

BAT was down 3.3 percent after the maker of Pall Mall and Dunhill cigarettes said the trading environment remains challenging because of pressure on consumer disposable income worldwide, currency issues and a slow economic recovery in western Europe.

"Any company that has been operating globally, particularly in emerging markets, has been facing currency headwinds," David Battersby, investment manager at Redmayne-Bentley, said.

"BAT represents premium products, and people will pay for that premium. But when you are paying one thing one day and another the other (because of currency fluctuations), then to maintain your revenues you have to reduce prices, which is going to affect profitability."

Retail stocks fell on industry data showing sales at Tesco had fallen in the last 12 weeks. Tesco (Xetra: 852647 - news) , Sainsbury's and Morrisons fell in the range of 2.0 to 3.6 percent.

The mid-cap FTSE 250 rose 0.9 percent, boosted by a bullish update by gambling technology business Playtech and bid speculation surrounding specialty chemicals maker Croda International.

Croda rose 5.5 percent, adding to a 1.8 percent gain on Tuesday, which the Daily Mail and Daily Express newspapers attributed to talk of a 4 billion pound ($6.5 billion) offer for the company.

Playtech (LSE: PTEC.L - news) surged 5.1 percent after saying it was confident it would exceed current market expectations after a strong start to its fourth quarter, which followed a 29 percent rise in revenue in the preceding period. (Additional reporting by Francesco Canepa; Editing by David Goodman and Jane Baird)