UK FTSE rises as acquisition plans boost CRH, Imperial Tobacco

* FTSE 100 up 0.7 pct

* CRH (NYSE: CRH - news) tops FTSE risers on asset purchases prospect

* Imperial Tobacco (LSE: IMT.L - news) boosted by plans to buy new brands

* IAG rises as way cleared for Aer Lingus (Other OTC: AELGF - news) bid

By Francesco Canepa and Sudip Kar-Gupta

LONDON, May 27 (Reuters) - Britain's top share index bounced back on Wednesday from a two-week low hit the day before as acquisitions activity boosted Imperial Tobacco, cement maker CRH and International Consolidated Airlines Group .

Shares (Berlin: DI6.BE - news) in CRH rose 2.6 percent to the top of the FTSE 100 on news that it was set to buy assets from rival Holcim and Lafarge (Paris: FR0000120537 - news) .

Imperial Tobacco added 2.2 percent as traders welcomed acquisition plans that would boost its market share.

British Airways owner IAG was up 0.8 percent after the Irish government cleared the way for it to make a bid for Aer Lingus .

The blue-chip FTSE 100 index had advanced 0.7 percent to 6,995.31 points by 1120 GMT, recouping just over half of its fall in the revious session.

The index is up around 6 percent since the start of 2015, but has struggled to make headway since touching an all-time high last month.

However, Toby Campbell-Gray, head of trading at Tavira Securities, said the backdrop of corporate takeover activity would enable the market to maintain its upward trajectory.

"The fact that there is this M&A (merger and acquisitions) activity will underpin this market," he said.

Britain's Queen Elizabeth said on Wednesday the government would pass a law paving the way for a referendum on the country's membership of the European Union. The vote is seen as a possible risk for the market.

Among other movers, Lloyd's of London insurers Beazley and Hiscox rallied after JPMorgan (LSE: JPIU.L - news) analysts named the pair their top picks in the sector and upgraded them to "overweight" from "neutral".

Banknotes printer De La Rue (Other OTC: DELRF - news) dropped 8.8 percent and hit a 4-month low after reporting a 22 percent fall in full-year underlying operating profit. (Editing by Mark Heinrich)