Upbeat earnings hoist Britain's FTSE to 7-1/2 week high

* FTSE 100 index gains 1 pct

* BP (LSE: BP.L - news) up; raises dividend, promises more share buybacks

* St. James's Place gains on positive update

* Shire (LSE: SHP.L - news) hit by fading bid hopes; traders say buy on dips (Updates prices)

By Tricia Wright

LONDON, April 29 (Reuters) - Britain's blue chip shares hit a 7-1/2 week closing high on Tuesday, bolstered by upbeat corporate earnings reports from oil major BP and wealth manager St. James's Place.

BP, up 2.9 percent, contributed most points to the UK benchmark index as it raised its quarterly dividend and said more share buybacks were on the cards. St. James's Place , which said it got off to a strong start in 2014, advanced 2 percent.

"Investors are waiting to see the start of some positive earnings momentum, which has been missing in recent years. Any sign of a positive momentum is likely to support share prices," James Butterfill, global equity strategist at Coutts, said.

The FTSE 100 ended up 69.75 points, or 1 percent, at 6,769.91 points, its highest close since March 6.

Barclays Capital analyst Lynnden Branigan said that the close above 6,706, the level which marked the top of the range in recent weeks, could pave the way for the index to rise to the high seen on March 4, at 6,827.

Shire, the top blue-chip percentage gainer for much of the session, turned negative in afternoon trade. Traders attributed the turnaround to a report that Botox-maker Allergan (Berlin: AG4.BE - news) , which had been rumoured to be interested in buying the British drugmaker, is instead looking to sell itself.

Allergan (NYSE: AGN - news) is exploring a sale to Sanofi (NasdaqGM: GCVRZ - news) or Johnson & Johnson in order to fend off a takeover bid by Valeant, Bloomberg reported, citing people with knowledge of the matter. This would rule out a purchase of Shire.

But traders remained bullish on Shire, up about 15 percent over the last two weeks on speculation it has been rebuffing approaches from U.S. rivals such as Allergan, alongside a burst of deal-making and bids in the healthcare industry.

Its shares, which tested record highs hit in March earlier in the session, fell 0.7 percent.

"I think any dip's going to be short-lived because the sector's quite interesting at the moment," said Manoj Ladwa, head of trading at TJM Partners.

(Additional reporting by Atul Prakash and Alistair Smout; Editing by Ruth Pitchford)