* FTSE 100 closes up 0.4 pct at 6,844.94 points
* ARM buoyed by Numis' price target upgrade
* IHG rises after media report of bid interest
* AstraZeneca falls after Pfizer walks away
LONDON, May 27 (Reuters) - Britain's main equity index climbed on Tuesday, lifted by gains in chip designer ARM and InterContinental Hotels Group (IHG), which pushed the market back to within reach of its record high.
The blue-chip FTSE 100 index closed up 29.19 points, or 0.4 percent, at 6,844.94 points.
ARM was the best-performing FTSE stock in percentage terms, rising 4 percent to 917 pence. Traders attributed the move to Numis Securities increasing its price target to 920p from 880p, after an upbeat presentation from the company at a briefing for investors.
IHG rose 3.4 percent after Sky News reported it had rejected a 6 billion pound ($10.1 billion) takeover offer from a U.S. bidder. A spokeswoman for IHG declined to comment on the report.
A pick-up in mergers and acquisition (M&A) activity has underpinned stock markets this year, enabling them to maintain a broad, upwards trajectory begun at the start of 2014.
But not all deals have come through.
Drugmaker AstraZeneca fell another 1.8 percent after Pfizer on Monday - when London markets were closed for a public holiday - formally walked away from making a bid, having said last week it would not raise its terms to meet what management of the mooted target had demanded.
Traders remained confident that the FTSE would progress further this year to challenge the 7,000 level, which would mark a record for the index.
"It looks like the upwards momentum is still with us and that the uptrend should continue," said Dafydd Davies, senior trader at London-based Prime Wealth Group.
Earlier this month, the FTSE rose as high as 6,894.88, its highest a record 6,950.60 set in December 1999.
Although the index retreated 0.6 percent last week to post its biggest weekly decline in more than a month, some technical analysts still see scope for further gains. The FTSE remains up by 1.4 percent since the start of 2014.
"There is still reluctance among traders to take it through 6,900 at this point. That said, the FTSE looks well supported up here and would probably have to break below 6,750 to alter that impression," said Charles Stanley analyst Bill McNamara.
($1 = 0.5936 British Pounds) (Additional reporting by Tricia Wright; Editing by Jane Merriman and David Holmes)