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FTSE -100 index higher as media stocks dazzle again

LONDON: The UK's FTSE 100 index ended 0.5 percent higher on Wednesday, buoyed for the second straight day by Internet investment plans from a leading media sector company.

With pay-TV group British Sky Broadcasting surging for a second session after confirming online plans, the UK benchmark index climbed 29.6 points to close at 6,315.4 -- extending Tuesday's 167-point bounce from 14-week lows set in the previous session.

The FTSE 100 had earlier been up some 165 points during the morning but drifted back as Wall Street opened on a weak note. Total market volume was once again heavy, with around 2.5 billion shares changing hands by the official 1630 GMT close. Dealings in Vodafone AirTouch accounted for about 31 percent of turnover. Global news and information company Reuters Group was a strong feature for a second day, up around 17 percent as investors continued to applaud its Internet strategy. Enthusiasm spread to other sector leaders such as Reed , up 20 percent, and Pearson which rose 4.6 percent.

"The FTSE itself is becoming more technology based but people who want to invest in pure technology are going to be more interested in techMARK," said Credit Suisse First Boston equity strategist Steve Wright. "This is very fashionable at the moment." Banks were the other main focus, with Bank of Scotland gaining 9.3 percent as its rival Royal Bank of Scotland took the lead in the battle for control of NatWest -- leaving Bank of Scotland itself possibly vulnerable to a bid.

Royal Bank suffered from the "winner's curse" to fall 14.5 percent, while NatWest nudged up 1.4 percent.

Venture capital firm 3i Group hit a life time high as investors focused on the potential in some of the company's high tech investments. The stock rose nearly 18 percent.

British American Tobacco rebounded from eight-year lows as investment bank Credit Suisse First Boston said the whole European tobacco sector looked significantly undervalued.

There were solid gains too for merging pharmaceutical giants Glaxo Wellcome and SmithKline Beecham as institutions built up weightings in the sector. Dealers said fund management groups were using up excess cash raised for purchases of Vodafone AirTouch following its agreed bid with Mannesmann .

Yet some dealers said institutions were still looking to build up cash reserves ahead of the Vodafone-Mannesmann deal going unconditional, and were targeting BP Amoco and Shell because of their high liquidity. BP Amoco dropped 6.3 percent and Shell shed five percent.

Vodafone meanwhile slipped 5.4 percent as Mannesmann fell sharply on news it was likely to be ejected from Germany's leading DAX-30 index. Elsewhere, technical analysts said the FTSE 100 had looked to have broken out of its recent downtrend but added the index needed a period of consolidation before heading up to 6,700 and its record closing high of 6,930.2 set on December 30. "We are approaching some resistance at 6,475 and there is more at 6,620," said Sam Freeman of Trend Analysis Ltd.

"We should see some sideways consolidating activity before building for the next big move."

Meanwhile, the FTSE 250 index of medium-sized stocks also surged, putting on 88.8 points or 1.5 percent to 6,116.9.

Kingston Communications was one of the best performers, rising 26 percent on news it had entered a joint venture with BSkyB to provide a multimedia service.

British-Borneo Oil & Gas bounced 32 percent from recent weakness triggered by news of production problems on Monday the company had cut its output forecast.-Reuters