** Shares of BAT BATS.L up 4.3% at 3137p, top gainer on FTSE 100 index .FTSE

** Peer Imperial Brands IMB.L up as much as 2.4% at 2,693p - hit highest level in nearly 6 years

** Trump administration withdraws FDA plan to ban menthol cigarettes

** Menthol cigarettes comprise a third of tobacco industry's total U.S. market share

** UBS also upgrades BAT to "buy" from "neutral", saying regulatory headwinds could be behind

** UBS cites upgrade to acceleration in sales growth of BAT's new categories; also flexibility in BAT's stake in ITC ITC.NS

** UBS raises BAT PT to 3,900p from 3,000p; new PT implies upside of ~30%

** BAT hit highest since March 2023

** 8 of 13 analysts covering BAT have "buy" or higher rating, 4 "hold" while 1 "sell" or lower; median PT 3250p - data compiled by LSEG

** Despite growth, global expansion of Chinese vapour manufacturers' poses challenge to tobacco companies - UBS

(Reporting by Simone Lobo in Bengaluru)

((Simone.Lobo@thomsonreuters.com; +919920570373;))