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Updated at 1600 GMT

By Lisa Pauline Mattackal and Shashwat Chauhan

Sept 26 (Reuters) -UK's FTSE 100 closed up on Thursday, though lagging its European peers as energy giants slipped tracking declining crude oil prices, which offset gains from China-exposed pockets of the market following Beijing's latest pledge for more policy measures.

The blue-chip FTSE 100 .FTSE closed 0.2% up, underperforming peers on the continent. Europe's STOXX 600 .STOXX and Germany's DAX .GDAXI ended more than 1% up.

Heavyweight energy shares .FTNMX601010 eased 4.4% as crude oil prices dropped more than 2% on a media report that Saudi Arabia will give up its price target in preparation for raising output, and as OPEC+ looked set to raise output in December. O/R

"Growing concerns of an increase in oil production from various parts of the Middle East including Saudi Arabia pulled down the price of the black stuff," Dan Coatsworth, investment analyst at AJ Bell, noted.

"That's bad news for oil producers like BP."

China will deploy "necessary fiscal spending" to meet an economic growth target of roughly 5%, leaders pledged, following a raft of aggressive central bank policy easing measures earlier in the week.

Prospects of firmer Chinese demand gave a boost to most base metal prices, which in turn helped industrial metal miners .FTNMX551020 jump 4.7%. MET/L

Shares of China-exposed luxury firms jumped across Europe, with UK's Burberry BRBY.L gaining 8.7%, while Watches of Switzerland WOSG.L jumped 11.1% after Deutsche Bank upgraded the stock to "buy" from hold and raised its price target.

These moves boosted the domestically-focused FTSE 250 midcap index .FTMC up 1.2%.

Asia-focused lenders HSBC HSBA.L and Standard Chartered STAN.L rose 2.1% and 5.3%, respectively, while insurer Prudential PRU.L jumped 6.1%.

Domestically, a survey from the British Retail Consortium survey showed British consumers have grown more gloomy over the past month following the new Labour government's removal of a welfare benefit for pensioners and warning of tax rises at next month's budget.

Reporting by Lisa Mattackal and Shashwat Chauhan in Bengaluru; Editing by Alexandra Hudson

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