* FTSE 100 up 0.5 pct
* Higher crude lifts oil stocks, hits airlines
* TUI sticks to forecasts, shares gain (Adds details, closing prices)
By Danilo Masoni
MILAN, Sept 27 (Reuters) - Britain's top share index rose on Thursday to a four-week high, helped by a drop in sterling, while continued weakness in basic materials stocks weighed.
The FTSE 100 .FTSE gained 0.5 percent as the pound was held back by strength in the dollar following a U.S. rate hike and investors remained nervous on the outcome of Brexit talks. index, whose companies make around 70 percent of their total earnings from overseas, slightly outperformed the broader European market, which was weighed down by worries over Italy's budget.
Among the top FTSE gainers were tobacco group BAT BATS.L , spirits maker Diageo DGE.L and drugmaker Shire SHP.L , which all rose more than 1 percent.
Oil and gas stocks .FTNMX0530 rose as crude prices were pushed higher by the prospect of tighter markets due to U.S. sanctions against major oil exporter Iran. the U.S. releases reserves or OPEC commits to further output to plug the gap, oil could continue to crank higher from here," said Markets.com analyst Neil Wilson.
Oil major BP BP.L was the biggest gainer in the sector, up 1.2 percent, while Shell (LON:RDSa) RDSa.AS eased 0.1 percent.
Airlines suffered from the strength in crude prices.
EasyJet EZJ.L fell 2.6 percent, further hit by a price target cut from Kepler Cheuvreux. British Airways owner IAG ICAG.L fell 0.6 percent but Ryanair RYA.L added 0.3 percent.
Travel operator TUI TUIT.L rose 2.5 percent after the company said it was on track to meet its forecasts for earnings growth, shrugging off the impact of a hot summer in its main customer markets. rival Thomas Cook (NS:THOM) TCG.L , which cut its profit forecast this week blaming a heatwave in Europe, gained 1.6 percent.
"The nature of TUI's tour operating business, which is less exposed to the late booking market where Thomas Cook suffered, and its greater exposure to the high growth and high margin cruise ship business have helped the former perform better," said Russ Mould, investment director at AJ Bell.
Miners were broadly lower as copper prices fell further. The sector was the biggest weight to the FTSE on Thursday.
Mid-cap IG Group IGG.L was a stand-out faller, down 12.8 percent, after the online financial trading firm said its CEO Peter Hetherington would step down immediately. CMC (NS:CMC) Markets CMCX.L fell 2.2 percent. Both stocks have recently suffered sharp share price falls after weak results and amid tighter regulatory scrutiny.
Shares of Indivior INDV.L fell sharply for a second straight day, down 13 percent, as prospects for the British drugmaker's new potential blockbuster drug waned.