Sage props up Britain's FTSE after reassuring update

* FTSE 100 up 0.2 pct

* Sage rallies after saying on track to meet targets

* RBS (LSE: RBS.L - news) falls as UBS (Xetra: UB0BL6 - news) downgrades on valuation

By Francesco Canepa

LONDON, Jan 22 (Reuters) - Britain's main share index edged up on Wednesday, led by software developer Sage Group (LSE: SGE.L - news) after a reassuring update.

Shares in Sage rose 2.7 percent after the group said it is on track to meet growth targets after good performances in Britain, Ireland (Other OTC: IRLD - news) and the Americas since the start of October.

Panmure Gordon analysts said they were delighted with Sage's performance but warned that the stock's valuation is already pricing in growth.

The stock was among top risers on Britain's FTSE 100

The index touched its highest since May 2013 on Tuesday and was roughly 100 points away from its all-time peak of 6,950 points, set in late 1999.

"I think 6,950 is a realistic short-term upside target for the FTSE before we start seeing some profit-taking," said Mark Ward, head of execution trading at Sanlam Securities.

Equities have been supported by an improvement in economic data in the United States, Britain and the rest of Europe at a time of record low interest rates across the developed world.

Yet some analysts were starting to flag inflated valuations for certain stocks, especially in the context of weak earnings.

Shares in RBS fell 2.3 percent as UBS downgraded the stock to "sell" from "neutral", saying the stock, which has risen 31 percent since July, was trading at the "wrong" price.

"While we have high expectations that the management team will be able to out-perform on the operational delivery, we think the share price is starting in the wrong place," the bank's analysts said in a note.