Britain's FTSE led higher by Imperial Tobacco and airline IAG

* FTSE 100 recovers from pullback in previous session

* Imperial Tobacco (LSE: IMT.L - news) boosted by prospect of buying new brands

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

By Sudip Kar-Gupta

LONDON, May 27 (Reuters) - Britain's top share index bounced back on Wednesday from a two-week low in the previous session as gains at Imperial Tobacco and International Consolidated Airlines Group (IAG) lifted the market.

The blue-chip FTSE 100 index, which hit a record high of 7,122.74 points last month, advanced 0.4 percent to 6,973.20 points. The index is up around 6 percent since the start of 2015.

Among the top performers on the FTSE 100 was Imperial Tobacco, which rose 1.8 percent as traders welcomed acquisition plans that would boost its market share.

The U.S. Federal Trade Commission approved Reynolds American's deal to buy smaller cigarette rival Lorillard but on condition that the companies sell four brands -- Winston, Kool, Salem and Maverick -- which will be acquired by Imperial Tobacco.

British Airways owner IAG also rose 1.4 percent after the Irish government cleared the way for it to make a bid for Aer Lingus.

Shares (Berlin: DI6.BE - news) in cement maker CRH (NYSE: CRH - news) also rose on news it was set to buy assets from rival Holcim (Other OTC: HCMLF - news) and Lafarge (Paris: FR0000120537 - news) .

Plans by the British government for a referendum on Britain's membership of the European Union are seen as a possible risk for the market.

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

"The fact that there is this M&A (merger and acquisitions) activity will underpin this market," he said. (Reporting by Sudip Kar-Gupta; Editing by Raissa Kasolowsky)