* FTSE 100 up 0.9 pct, outperforming regional peers
* Index ahead for the year after three-day rise
* BHP Billiton gains as results beat expectations
By Francesco Canepa
LONDON, Feb 18 (Reuters) - Britain's top equity index erased its losses for the year as it rose for a third straight session on Tuesday, boosted by BHP Billiton and telecoms operator BT.
Shares in Billiton, a global mining company, rose 1.9 percent after its first-half profit beat forecasts and the firm hinted at a share buyback in August, despite a cautious outlook on Chinese growth.
Concerns about the Chinese economy and emerging markets remain, but they have eased considerably over the past two weeks, thanks to better economic data from China and a pledge by the Federal Reserve to keep U.S. interest rates low.
The FTSE 100 ended up 60.43 points, or 0.9 percent, at 6,796.43 points. It has now risen in nine of the last 10 sessions, taking its total gain over that period to 5.4 percent. That is its best run since October, and leaves it up 0.7 percent year-to-date. It now faces psychological resistance at 6,800.
"The fact that we had some better data over the last couple of weeks calmed some of the nerves out there and helped to feed the risk appetite we've seen in European equities," said Joshua Raymond, a strategy at City Index.
"We could face some resistance ... that could cause a bit of profit-taking, considering that we've gone up quite quickly, but we're still hoping we'll see some bullish action in the longer term."
The FTSE 100 generates a quarter of its revenues from emerging markets, and it lagged its more domestically focused peers during the rout in developing markets earlier this year.
BT was the top FTSE riser, chalking up its best two-day gain since June 2013. Britain's Court of Appeal said on Monday a lower court should review the way pay-TV group BSkyB sells its sports channels to rivals such as the telecoms group. BT is one of those rivals.
Traders also flagged BT as a potential beneficiary of a rebalancing in the FTSE, after Vodafone sold its stake in Verizon Wireless.
Curbing gains on the FTSE on Tuesday was Intercontinental Hotels, which retreated from an all-time high after the hotel operator offered no new plans to return money to shareholders, even though it had recently sold some property.
"They sold two big assets ... but the current (share) buyback is ongoing so it was perhaps a bit naïve to expect a large capital return today," Nomura analyst Tim Barrett said.
Volume on InterContinental shares was nearly three times its full-day average for the past three months. Volume on the FTSE was 30 percent higher than its own 90-day average.
The drop in InterContinental Hotels was starting to lure bargain hunters into the stock as the fundamental investment case on the company was seen as intact. The shares hit an intra-day low at 1,946 pence before recovering to 1,980 pence.
"We feel that despite the delay in the cash return it is going to be a good buying opportunity (as) fundamentals remain firm," said Ed Woolfitt, head of trading at Galvan.