20000125FTSE - 100 index closes highere LONDON: The FTSE 100 closed higher on Monday for the first time in five sessions, led by gains in media and telecoms stocks, but dealers said the index still looked vulnerable ahead of big economic news due later in the week.

Bouncing from its lowest levels since November 5, the FTSE finished the session 33.5 points or 0.5 percent higher at 6,379.8, clawing back a fraction of the 312 points it shed last week amid growing fears over interest rates on both sides of the Atlantic.

Having jumped more than 100 points at the bell, the Dow was 50 points lower by the time London trading wound up for the day at 1630 GMT.

By comparison, the high-tech Nasdaq just managed to keep its head above water with a four-point rise by the same time.

The top performing UK blue chip was telecoms group Cable & Wireless up nearly 13.9 percent as investors applauded news the company was mulling a tie-up between its Hong Kong arm and Singapore Telecom .

A resounding chorus of approval met the news, with more than 28 million C&W shares changing hands, even though the company said talks were at too early a stage to make any predictions as to their outcome.

EMI and pay-TV operator were the next two strongest climbers as merger hopes shunted the whole sector higher in the wake of EMI's Time Warner tie-up to form the world's largest music group.

Decliners had the upper hand over advancers by 56 to 43, but dealers said the most important overall factor in the London market was turnover, which could only crawl to 1.35 billion shares traded by the official close -- well below last week's average of around 1.75 billion shares. One dealer said the low volume proved UK investors were happy to sit tight on mounting piles of cash as they waited for the Bank of England's rate meeting minutes on Wednesday and then preliminary estimates for UK and U.S. gross domestic product growth due on Friday.

All three items will hold important sway over looming interest rate meetings for the BoE and Fed.

"We were due a technical rally after last week, and we got it, but it was ambushed at the top by people worried about the economic news due on both sides of the Atlantic," one senior salesman said.

"We're back onto interest rate watch again, and people speculating whether rises have all been priced in," he added. Investors gave modest applause to EMI's merger, pushing the shares up 11.3 percent at the close on heavy turnover of more than 32 million shares, after hearing they would receive 100 pence per share to compensate for their loss of control of the final group.

Hopes of more consolidation in the industry lifted the whole sector, most notably BSkyB, which outperformed EMI with final gains of 13.5 percent aided also by strong subscriber figures from French peer Canal Plus .

Germany's Bertelsmann BTGGga.F ruled itself out of any counterbid for EMI, while analysts in Tokyo said Sony 6758.T was also unlikely to enter the fray.

But dealers said EMI investors, semi-happy with the deal, were taking what profits they could and switching from EMI to other media listings.

The sector as a whole lent 24 points to the FTSE, with Pearson and advertising group WPP up 6.6 and 5.1 percent respectively.

Telecoms were the other half of the bedrock on which the FTSE built its gains, with a moderate rise for Vodafone , but oil giant BP Amoco also managed to climb 2.2 percent.

On the downside railway operator Railtrack continued to suffer the blues after last week's profit warning, dropping 4.9 percent, while defence contractor BAE Systems and drugs Glaxo Wellcome lost 4.8 percent apiece.

Dealers said both stocks were suffering the effects of a soaring pound. Highlights of London's second tier stocks were fine chemicals maker , which climbed 12.8 percent after agreeing a 1.08 billion pound merger with Swiss group Clariant while Internet investment house Durlacher jumped 16 percent.

Both stocks helped the FTSE 250 nudge up 0.3 percent to 6,738.3, while the Small cap index edged 1.9 points lower.

High-flying take-over vehicle Knutsford was a notable faller, down 28 percent amid talk it was due to make a deeply discounted rights issue to raise between 600 and 700 million pounds to finance a bid for mini-conglomerate Wassall

Division two soccer club Millwall Holdings was the second most active UK stock behind Vodafone. More than 100 million Millwall shares traded following recent strong results, dealers said, although the stock ultimately remained unmoved at 1-5/8 pence.

Turning to the charts, technical analysts said the FTSE's quick reprieve after last week's tumble was unlikely to last long.

Closing only a whisker above its 100 and 200-day moving averages, Royal Bank of Scotland chartist Brian Kiely said the FTSE was in a head and shoulders top formation, which suggested a medium-term target of 5,898.

Kiely added that the Dow was looking vulnerable from a chart perspective and while support existed at 11,000, 10,938 and 10,629, any retreat to these levels would quickly crush Europe's equity markets.-Reuters