Sterling up broadly, hits 5-mth high vs weak euro

* Stg at 5-mth high vs euro, 4-1/2 mth high vs FX basket

* Pound remains buoyed by hawkish BoE's Sentance

* Weak euro, due to Greece concerns, pressures euro/sterling

LONDON, Jan 28 (Reuters) - Sterling rose on Thursday, hitting a five-month high against a weak euro and a four-and-a-half month high against a currency basket, extending gains on the back of hawkish comments from a UK policymaker.

BoE policy board member Andrew Sentance said on Wednesday it may be difficult for the central bank to keep inflation on target if import and services prices keep rising. [ID:nLDE60Q14O]

His focus on inflation strengthened the view that the Bank of England will next week opt to pause asset purchasing under its quantitative easing programme -- which so far totals 200 billion pounds -- thus lifting the pound.

Sterling was also buoyed against an underperforming euro, which remained under pressure due to concerns over the fiscal health of Greece and, increasingly, Portugal.

The speech from the BoE's Sentance "was seen as a hint that the BoE will not extend its asset purchase programme next week. As such this is no big news, but it matches the current (sterling positive) market sentiment," KBC analysts said in a note to clients.

Against the dollar, sterling gained in tandem with other perceived riskier currencies after U.S. President Barack Obama laid out steps to revive the economy and eased concerns about moves to limit bank risk-taking, boosting equities .FTSE.

By 0905 GMT, the euro fell 0.5 percent against sterling EURGBP=D4 to hit a five-month low of 86.26 pence, with traders saying a break through support at 86.50 pence helped to extend the common currency's losses.

Sterling rose 0.6 percent against the dollar GBP=D4 to $1.6260.

Measured against a basket of currencies =GBP, sterling's trade weighted index rose to 81.9, its strongest since mid-September.

"Euro/sterling's moves are largely a function of concerns over the euro zone as cable (sterling/dollar) is still in a range," UBS currency analyst Geoffrey Yu said.

"If people want to play euro weakness and are wary of doing so through euro/dollar they are looking more to the crosses, especially euro/sterling," he added.

Sterling was little moved by a weak retail sales survey on Wednesday and continued to rebound from losses earlier in the week following disappointingly low UK gross domestic product data for the fourth quarter.

No major data is due out of the UK on Thursday. ECONGB

(Reporting by Jessica Mortimer; Editing by Ruth Pitchford)