Direct Line outperforms as UK's FTSE gains ground

* Direct Line rises after selling units to Mapfre (Other OTC: MPFRF - news)

* FTSE edges higher

By Sudip Kar-Gupta

LONDON, Sept 25 (Reuters) - Britain's main equity index nudged higher on Thursday, with insurer Direct Line outperforming after it agreed to sell some of its international businesses to Spanish peer Mapfre.

Direct Line's shares rose by around 3 percent, after the company sold its Italian and German affiliates to Mapfre for 550 million euros ($700 million), in what traders said was a good sale price for the British insurer.

Direct Line was the best-performing stock, in percentage terms, on the blue-chip FTSE 100 index, which was up by 0.1 percent - or 7.05 points - to 6,713.32 points in early session trading.

"We are seeing a base here for the FTSE to push higher," said Dafydd Davies, partner at London-based firm Charles Hanover Investments.

Davies said the FTSE could return to the 6,800-6,850 point level, provided that any pull-back on the UK stock market did not push the FTSE 100 below the 6,650 point level.

Traders added the UK stock market was also benefiting from a rise in European equity markets in general, which were supported by a reiteration by European Central Bank (ECB) head Mario Draghi that the ECB was prepared to launch new economic stimulus measures to boost the euro zone economy.

Securequity sales trader Jawaid Afsar expected the FTSE to hit a record high of 7,000 points by the end of 2014, but added he would not look to buy into the index at current levels.

"Given that this is a traditionally weak period in equity markets, I would not want to chase this market higher and would be happy to buy in the low 6,600 points area. However, I still favour a move to 7,000 by year-end," he said.

(1 US dollar = 0.7853 euro) (Editing by Toby Chopra)