By Lionel Laurent and Francesco Canepa

LONDON (Reuters) – Royal Dutch Shell’s $ 70 billion (47 billion pounds) bid for energy firm BG Group lifted Britain’s top share index on Wednesday, helping it outperform its continental peers.

The FTSE 100 <.FTSE> was up 0.5 percent at 6,998.71 points by 1103 GMT, while Germany’s DAX <.GDAXI> and France’s CAC <.FCHI> eased. The FTSE hit a record 7,065.08 on March 24.

Shares in BG jumped 34.7 percent to hit their highest level since September when it was sliding lower alongside the price of oil. Shell is offering a premium of about 52 percent to BG’s trading average for the past three months.

Shell’s two UK listings fell 2.3 percent and 5.3 percent, respectively.

“With BG Group, Shell gets exposure to Brazil’s vast Santos Basin reserves, and further involvement in the integrated gas market,” Lombard Odier Global Energy Fund manager, Pascal Menges, said.

“But it comes at a hefty price. Management will have their work cut out to execute the deal and generate synergies and assets sales.” 

The proposed deal, seen as a possible harbinger of further mergers and acquisitions activity in the battered energy sector, fuelled by ultra-low interest rates across the developed world, lifted the general mood.

“It’s almost cheaper to buy a company than drill for oil yourself in this type of environment,” said fund manager Paul Mumford at Cavendish Asset Management, which manages about 1 billion pounds in assets and owns shares in Shell and BG.

BP rose 2 percent and Tullow Oil was up 9.2 percent.

Pay-TV group Sky rose 1.5 percent after Reuters reported that French media conglomerate Vivendi was looking buying it as one of several options to expand the reach of its own TV group Canal Plus.

Foreign investors are snapping up British companies at the fastest pace in eight years, according to Reuters data, despite a looming general election that investors think will feed market volatility over the coming weeks.

The election is shaping up to be the most unpredictable in a generation and, adding to the uncertainty, Scottish nationalist leader Nicola Sturgeon has raised the prospect of another independence referendum after 2016.

“The election [is] still failing to dent the [FTSE] index’s strength,” said Connor Campbell, analyst at Spreadex.

(Editing by Louise Ireland)