* FTSE 100 advances 0.3 pct
* Earnings in the UK outperforming Europe
By Tricia Wright
LONDON, May 2 (Reuters) - Britain's top share index hit afresh two-month high on Friday, with RBS andInterContinental Hotels the most notable risers on theback of robust earnings, as investors also welcomed strong U.S.jobs growth.
Shares in AstraZeneca, which have surged almost 30percent since U.S. rival Pfizer indicated in April it wanted tobuy the British drugmaker, were flat after a sweetened $106billion takeover bid was rejected by AstraZeneca's board.
Part-nationalised RBS surged 9.2 percent, the top FTSE 100riser, after trebling its profit in the first quarter,benefiting from improved cost control and a reduction in lossesfrom bad loans.
Jefferies said the bank's earnings were more than twiceconsensus estimates, with impairments 48 percent below forecast.
Also rising after robust results was InterContinental HotelsGroup, which proposed a special dividend along with itsstrongest room revenue performance in seven quarters. Its sharesjumped 8.1 percent.
"InterContinental has delivered a stellar performance.Growth in revenue per available room is ahead of expectation ...while the return of hotel sale proceeds in the form of a specialdividend is ahead of schedule," Hargreaves Lansdown Stockbrokersequity analyst Keith Bowman said.
Meanwhile, non-farm payrolls showed the U.S. economy added288,000 jobs in April, beating a 210,000 consensus forecast andfuelling the view that the world's biggest economy is regainingpace after bad weather hit growth early in the year.
RBS, IHG and the encouraging U.S. data helped lift the FTSE100 by 17.03 points, or 0.3 percent, to 6,825.90 pointsby 1506 GMT, a fresh two-month high.
Of companies that have reported quarterly earnings so far,82 percent of FTSE 100 companies have beaten or metexpectations, compared to 57 percent of STOXX Europe 600 companies.
However, only 18 percent have met or beaten forecasts forrevenues on the FTSE 100, Thomson Reuters StarMine data showed.
"(The StarMine) figures tell you everything you need toknow. There's been greater weakness in the top line in general,and the bottom line has been artificially boosted by things likeshare buybacks," said Charles Stanley (LSE: CAY.L - news) analyst JeremyBatstone-Carr.
While flagging that the FTSE 100 has come up against strongresistance around the 6,800 level, traders were optimistic aboutthe UK benchmark's near-term prospects.
"Risk appetite seems to be back on the table," Matt Basi,head of sales trading at CMC Markets, said. "If we can reallybuild a solid footing at these levels ... then there's a chancethat we could really push on and have a look at that 7,000 levelfor the first time."
Equity markets have been buoyed in the last two weeks by aburst of deal-making and bids largely in the healthcare sector.
Shares in AstraZeneca were 0.1 percent lower at 4,811 penceon Friday after the company's board rejected Pfizer's revised offer of 50 pounds ($84.47) a share, saying itsubstantially undervalued the drugmaker. ($1 = 0.5919 British pounds) (Additional reporting by Alistair Smout; Editing by SusanFenton)
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