UK's FTSE 100 and FTSE 250 equity indexes rise, Sky and ITV outperform

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* ITV (Frankfurt: A0BLQP - news) , Sky (Frankfurt: 893517 - news) lifted by AT&T (Sao Paolo: ATTB34.SA - news) /Time Warner (Xetra: AOL1.DE - news) proposed deal

* Cobham (Other OTC: CBHMF - news) slumps after issuing profit warning

By Sudip Kar-Gupta

LONDON, Oct (HKSE: 3366-OL.HK - news) 24 (Reuters) - Britain's top shares index rose on Monday to move back within sight of a record high reached earlier this month, with media stocks outperforming in the wake of AT&T and Time Warner's planned blockbuster deal.

The blue-chip FTSE 100 index was up 0.3 percent at 7,037.69 points, close to a record high of 7,129.83 points reached on Oct. 11.

The FTSE 250 mid-cap index also advanced by 0.2 percent.

TV and media company ITV rose 1.9 percent while rival Sky also climbed around 1 percent, after AT&T's planned $85 billion takeover of Time Warner raised the prospect of similar consolidation in Europe.

ITV has been the subject of bid speculation involving European cable operator Liberty Global (Frankfurt: A1W0FL - news) .

In July 2015, Liberty Global said it had raised its stake in ITV to 9.9 percent but added it had intention of taking over ITV.

"The AT&T/Time Warner deal faces regulatory scrutiny, but the deal is nevertheless raising the possibility of similar sector consolidation within Europe," said Beaufort Securities' sales trader Basil Petrides.

Provident Financial (Other OTC: FPLPF - news) also rose after Goldman Sachs (NYSE: GS-PB - news) raised its price target on the stock, while budget airline easyJet climbed after UBS (LSE: 0QNR.L - news) upgraded it to "buy" from "neutral".

However, Royal Bank of Scotland (LSE: RBS.L - news) fell after Investec downgraded RBS to "sell" from "hold", while aerospace and defence company Cobham also slumped nearly 20 percent after Cobham issued its second profit warning in six months.

The blue-chip FTSE 100 index is up around 13 percent since the start of 2016, but down by around 7 percent in U.S. dollar terms, due to a slump in sterling caused by Britain's shock "Brexit" vote in June to quit the European Union.

The fall in sterling has given a boost to many of the FTSE 100's international companies which earn much of their revenues in U.S. dollars, and therefore get a currency-related accounting lift as those dollars are converted back to pounds.

However, the drop in the U.S. dollar value of FTSE 100 stocks is a potential negative for overseas investors for whom the dollar is their benchmark currency reference.

(Editing by Jon Boyle)