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FTSE -100 scores biggest rise in seven months

LONDON: Britain's FTSE 100 scored its biggest one day points gain in seven months on Tuesday, bouncing 2.7 percent from Monday's 14-week lows on the back of strong gains in telecom and media stocks.

Drawing support from an advance on Wall Street, the blue chip UK index closed up 167.2 points at 6,285.8, its strongest one-day rise since July 1 -- when investors cheered a surprise U.S. decision to adopt a "neutral" stance on interest rates.

FTSE 100 gainers were in a two-to-one majority, while the Dow was up some 85 points by the London close.

Mobile phone giant Vodafone Airtouch powered the UK market higher, jumping 6.1 percent in a strong telecom sector to lift the FTSE 100 some 32 points.

Volume in Vodafone was heavy at 896 million shares, as usual the most active stock in the UK market and inflating total market volume to 2.9 billion shares by the 1630 GMT close -- among London's busiest days ever.

Other top gainers were in the media sector, where satellite broadcaster BSkyB BSY.L surged 10.3 percent amid hopes for fresh Internet news along with Wednesday's results.

In the same sector, news and financial information group Reuters leapt 23 percent as the market welcomed an Internet investment plan.

Other leading tech gainers of the day included financial software company Misys and IT service company Logica both up over 15 percent.

Banks were also a key focus as Royal Bank of Scotland gained 6.7 percent and some investors took the view that it would lose its bid for NatWest potentially becoming a target in its own right, dealers said.

NatWest rose 3.1 percent and Bank of Scotland -- seen as increasingly likely to win the battle for NatWest -- rose by a similar degree. In New York, shares were lifted by economic data showing a welcome five percent rise in industrial productivity without inflationary pressures.

Unit labour costs dropped by a greater than expected one percent, allaying worries that inflation prospects will prompt a succession of interest rate increases from the Federal Reserve.

The UK market's strong performance came despite prospects for another rise in UK interest rates at Thursday's Bank of England's monetary policy meeting.

Yet dealers said the weakness in leading shares so far this year -- with the FTSE 100 having dropped some 850 points at one stage on Monday from record peaks hit at the end of 1999 -- reflected the start of a bearish phase exacerbated by strong demand for technology stocks.

One victim of such trends was British American Tobacco BATS.L, whose 9.6 percent fall led the FTSE 100 losers board amid switching out of non-tech stocks coupled with talk of a fresh U.S. legal threat.

Others said the FTSE 100 looked good value after its losses so far this year. "The FTSE is looking quite attractive having had a 10 percent correction since the beginning of the year," said Michael Browne, head of European equity strategy at Chase Asset Management.

Among individual stocks, buyers moved back into Vodafone after it clinched its ambitious acquisition of Germany's Mannesmann late last week.

"There is some serious buying of a sort that we havn't seen for the past few days," said Atkinson at Capel Cure Sharp. "I imagine that could be the case for a while yet, because it could take a long time for index funds to make up their weightings."

Gains in technolgy stocks were reflected in a strong rise in FTSE techMARK 100 index, up 151.4 points or 3.3 percent at 4,698.85 -- its fourth straight record close.

By contrast the FTSE Mid 250 index of mid range stocks fell 95.5 points or 1.6 percent to 6,028.2, led by losses in the likes of water company Kelda , dairy group Unigate and United Assurance all down 16 percent or more.

At the other end of the mid cap scale, software company Kewill gained 11 percent after signing a partnership agreement with U.S. Internet postage company E-Stamnp Corp while Internet security specialist Baltimore jumped 10.3 percent.-Reuters