Shire, commodity stocks lift FTSE to 10-week high

* FTSE 100 up 0.2 pct

* Shire (Xetra: S7E.DE - news) jumps after Allergan (Frankfurt: A1W5NE - news) considers bid for co

* Unilever (NYSE: UL - news) drops on underwhelming price growth

* Debenhams (Frankfurt: D2T.F - news) ' outlook cut adds to retail gloom (Adds detail and quote, updates prices at close)

By Danilo Masoni and Kit Rees

MILAN/LONDON, April 19 (Reuters) - The UK's top share index rose on Thursday as surging crude oil prices boosted commodity stocks and Shire's shares jumped as bid talk heated up.

The FTSE 100 ended the session 0.2 percent higher at 7,328.92 points, its highest since early February. The mid-cap index also gained, up 0.7 percent.

Shares (Berlin: DI6.BE - news) in Shire soared nearly 6 percent to the top of the index after Botox maker Allergan said that it was in the early stages of considering a possible offer for the British rare diseases specialist.

Shire also rejected a third takeover bid worth nearly $63 billion from Japan's Takeda Pharmaceutical.

"This sort of play is common in the pharmaceutical sector as Takeda are keen to expand, seeing as patent expires are approaching," David Madden, market analyst at CMC Markets UK, said in a note.

"Allergan is relatively light in cash and heavily indebted, so there are no guarantees this will transpire," Madden added.

More broadly, the energy sector contributed most to the FTSE's gains with oil majors Royal Dutch Shell (LSE: 0LN9.L - news) and BP both up around 1.5 percent as oil prices hit their highest in over three years after a report that top exporter Saudi Arabia was pushing for higher prices.

The higher commodity prices however raised some worries over inflation.

"You would think that investors would start to worry (more) about the inflationary effects of the sharp rises being seen in commodity prices in recent weeks than the effects of some tariffs that haven't even been fully implemented yet," CMC (Shanghai: 600327.SS - news) Markets analyst Michael Hewson said.

Unilever fell 2.2 percent as worries over pricing offset an in-line set of results.

"Price growth is underwhelming ... This could concern investors that Unilever might lose pricing power," said Jauke de Jong, research analyst at ‎AFS Group in Amsterdam.

The Anglo-Dutch consumer goods group reported first-quarter sales figures that met expectations, helped mainly by increases in the volume of products sold, and maintained its full-year outlook.

Still in earnings, Rentokil Initial (Other OTC: RKLIF - news) rose 2.6 percent following its earnings update.

Shares in advertising group WPP (Frankfurt: A1J2BZ - news) , hit earlier this week by the departure of founder Martin Sorrell, got a tonic from a solid update from French peer Publicis (Paris: FR0000130577 - news) which beat sales growth forecasts driven by the rebound of its North American activities. WPP shares rose 3.6 percent.

Among mid caps, defence contractor Ultra Electronics (Frankfurt: 909716 - news) fell 8 percent after announcing that the UK's Serious Fraud Office had opened a criminal investigation into "suspected corruption in the conduct of business" in Algeria.

Weir Group (Other OTC: WEIGY - news) jumped 6.2 percent after the firm agreed to acquire U.S. mining tools maker ESCO for $1.05 billion.

In the battered retail sector, Debenhams fell 5.7 percent after the department store group cut its dividend and warned on its full-year outlook for the second time in four months.

Data showed that British retail sales recorded their biggest quarterly fall in a year during the three months to March, after unusually cold and snowy weather kept shoppers at home. (Reporting by Danilo Masoni and Kit Rees Editing by Robin Pomeroy)