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FTSE -100 index up sharply for second day as banks gain LONDON: A second day in the sun for UK banking stocks helped the FTSE 100 to a one percent gain on Thursday, leaving Tuesday's 12-week low a full 150 points away and hinting at a bottom to the year's early weakness.

The FTSE 100 ended at 6,441 points, up 65.4 points or 1.0 percent, within sniffing distance of the session high above 6,450.

Bank shares headed the advance, adding 35 points to the main London index after the Bank of Scotland rejigged its bid for National Westminster Bank .

Overall, the losers outpaced gainers nearly three to two but saw their efforts overwhelmed by heavyweights HSBC , Lloyds TSB and Barclays which together added 26 points.

British Telecommunications added momentum with a 16 point contribution from the four percent rise in its shares.

Wall Street's early tech-led advance buttressed London gains, boosting the bellwether Dow Jones industrial average some 80 points or 0.7 percent higher by the UK close.

"We are quite pleased with the FTSE's performance," said Natwest Stockbrokers head of research Jeremy Batstone.

"Now it appears as if everybody knows that there will be further short-term monetary policy tightening, starting next week with the Fed," he added. Fears of interest rate rises by the U.S. Federal Reserve and other major central banks sparked sharp declines in world stock markets after the turn of the year.

The FTSE's 12-week low of 6,274 at Tuesday's close was 10 percent down on its 1999 closing level, clawing back just the right amount to bring fair value for equities in relation to bonds, Batstone said.

U.S. durable goods data sparked a temporary lurch in the FTSE's advance mid-afternoon, with orders for all types of durable goods up 4.1 percent in December -- far stronger than the 0.8 percent rise forecast by Wall Street economists. Volumes remained healthy at nearly 1.5 billion shares traded by the official close with the hugely liquid stock in Vodafone Airtouch accounting for 220 million of those changing hands.

A volatile day for software maker Misys Plc saw its shares drop 10 percent first thing only to head the list of FTSE 100 gainers by the close with an 11.2 percent jump. Barely less robust was Dixons up 8.4 percent after a second day of gains in a bounce from Tuesday's three-month low.

Leading the fall among the FTSE 100's losers were British Sky Broadcasting, down 6.7 percent, and drugs retailer Boots Co down five percent.

Engineering stocks enjoyed a rare respite after Confederation of British Industry data logged higher demand for UK manufactured goods for the first time in nearly two years.

Leading the FTSE mid-cap risers were shares in British engineer Weir Group , up 13 percent, while others such as IMI and the Laird Group managed eight and 5.7 percent gains respectively. The FTSE index of mid caps had its share of fallers, slipping 6.2 points to close 0.1 percent lower at 6,311.4 points.

Minnows on the FTSE Small Cap index also edged down, dropping 5.9 points or 0.2 percent to 3,188.6.

Even softer was the the techMARK index, home to technology firms and others, which trimmed off 12.3 points or 0.3 percent to close at 3,969.7..-Reuters