Britain's FTSE buoyed by Burberry, emerging markets

* Burberry gains on bid speculation

* Emerging market-exposed stocks rise

(Updates)

By Sudip Kar-Gupta

LONDON, April 9 (Reuters) - Britain's FTSE 100 rose on

Thursday, as a recovery for emerging market-exposed stocks and

gains in Burberry driven by bid speculation kept the

index near all-time highs.

The blue-chip index was up 1.0 percent at 7,008.86

points at 1506 GMT, It hit a record high of 7,065.08 in March.

With just weeks to go before a national election that looks

too close to call, UK stock markets have so far shown few signs

of political jitters.

A pick-up in mergers and acquisitions activity including

Royal Dutch Shell (Xetra: R6C1.DE - news) 's proposed takeover of BG has

leant support.

Burberry shares were up 2.7 percent, with traders citing

market speculation of bid interest from U.S. private equity.

Burberry declined to comment.

"I have been buying up Burberry shares but I don't think

I'll go back in for more ahead of Burberry's (results) numbers

later this month," Securequity sales trader Jawaid Afsar said.

Improving sentiment towards emerging markets helped asset

managers including Ashmore and Aberdeen Asset

Management, both up around 3.7 percent, and HSBC

, which was up 2.7 percent.

The FTSE 100 was little changed after the Bank of England

kept interest rates at record lows as policymakers wait to see

whether a tumble in inflation is short-lived or turns into a

bigger threat for the British economy.

Temporary power provider Aggreko (LSE: AGK.L - news) lost ground as

violence escalates in Yemen, where the company has exposure.

Investors in other markets have shifted bets ahead of the

election, for which opinion polls put the Conservatives

neck-and-neck with the opposition Labour party.

Bets on how volatile the British pound will be over

the next month rose sharply on Thursday, driving the cost of

taking out insurance against sharp swings in the currency to

multi-year highs.

Some traders said the backdrop of takeover activity would

cushion the FTSE from any major hits caused by the May 7 vote.

"The M&A activity should keep the FTSE steady. The momentum

is still to the upside," Thames Capital Markets strategist Nav

Banwait said.

(Additional reporting by James Davey and Lionel Laurent;

Editing by Raissa Kasolowsky and John Stonestreet)