U.K.'s FTSE holds in recent range after U.S. jobs miss forecast

* FTSE 100 up 0.7 pct

* FTSE brushes 2014 high before payrolls pull index back

* Tullow Oil (LSE: TLW.L - news) lifted by bid speculation

By Alistair Smout

LONDON, Jan 10 (Reuters) - Britain's top share index rose on Friday but remained confined to its range for the year, after disappointing U.S. jobs data knocked the index back from its highest levels since early November.

The FTSE 100 touched a 2014 high at 6,769.94, just before a report on nonfarm payrolls showed U.S. employers hired the fewest workers in almost three years in December.

Some 74,000 people were added to payrolls last month, instead of the 196,000 that had been forecast by economists in a Reuters survey this week. Bad weather was cited as one reason for the lack of hiring.

The disappointing data took the momentum out of an index that had looked ready to escape its recent 90-point range, said Fawad Razaqzada, a strategist at GFT Markets. He still expects the market to push higher in the coming weeks.

"We need a big nonfarm payroll number to break out of this range today, and unfortunately that didn't happen," he said. "However, a consolidation in a tight range near last year's highs is healthy, and if we close this week above 6,755, that could set the stage for a break-out as soon as next week."

The index was up 45.28 points at 6,736.62 by 1515 GMT and looked set to open the first full trading week of the year with a 0.1 percent gain. The index is down 0.2 percent for 2014 overall, but it remains just 1.6 percent off a 13-year high reached last May.

The energy sector contributed the most to the index's advance, adding 15 points to account for a third of gains. Tullow Oil led both the sector and the index overall, rising 8.2 percent on speculation Norway's Statoil (Xetra: DNQ.DE - news) may be eyeing the oil and gas exploration company for a takeover.

"In these oil firms, you have to take some of the takeover talk with a pinch of salt, but there has been a lack of M&A speculation recently, so investors who are looking around for that sort of activity will jump on it," said Toby Morris, sales trader at CMC (BSE: CMCSL.BO - news) , said.

Bernstein analyst Oswald Clint said the Norwegian company's own success at discovering new oil and gas fields in recent years made it less likely that Tullow was on its shopping list, but said Tullow looked undervalued and could be attractive to a range of large companies.