* FTSE 100 gains 0.6 percent
* Longest winning streak for index since October
* Index just 1.6 percent off of 2013 high
* BSkyB gives away early gains after bid speculation
By Alistair Smout
LONDON, Dec 27 Britain's top share index rose on Friday, taking its cue from fresh all-time highs hit on Wall Street to notch up its sixth straight day of gains, its longest winning streak in two months.
The FTSE 100 was up 40.50 points, or 0.6 percent, at 6,734.67 points by 1106 GMT, after both the Dow Jones and the S&P 500 scaled record highs on Thursday, when the UK market was shut for the Boxing Day holiday.
The rise made it the UK benchmark's longest winning streak since October, fuelled by optimism that the U.S. economy is strong enough to withstand the gradual withdrawal of monetary stimulus. The FTSE 100 has risen nearly 5 percent from last week's low.
"The Santa rally came late but now the FTSE is grabbing hold of the Dow and the DAX and getting pulled along," said Will Hedden, sales trader at IG. The German DAX hit an all-time high on Friday.
In another positive sign for economic growth in the world's largest economy, U.S. jobless claims fell more than expected on Thursday. This followed robust U.S. durable goods orders data released on Dec. 24.
The gains leave the FTSE 1.6 percent off the 2013 closing high at 6,840, which was a 13 year high and only just over 100 points from an all time high.
"It feels like only a matter of time before we surpass the October high, and might make it there before New Year. Then with the all time high around 6,950, it seems reasonable that this could be hit during the first quarter of 2014," IG's Hedden said.
Traders saw scope for the UK benchmark to continue its ascent into 2014.
"It remains versus historical valuations still undervalued, and with the FTSE still lagging behind the EU markets we see relative outperformance into the first quarter of 2014," said Atif Latif, director of trading at Guardian Stockbrokers.
The FTSE 100 trades on a 12-month forward price/earnings ratio of 12.4 times, against its 15-year average of 14.6 times, Thomson Reuters Datastream shows. The index, up some 14 percent in 2013, has lagged a near 17 percent rise on the pan-European STOXX Europe 600.
Sectors sensitive to optimism over the economy, such as miners and banks, were among the top gainers.
In a thin session of trade, BSkyB was among the most heavily traded stocks, trading 37.5 percent its 90-day average volume, compared to an average of 12 percent across the index.
The stock had been among the top gainers on the FTSE 100, with traders citing takeover speculation in a Daily Mail market report, but it gave away early gains to trade just 0.4 percent higher.