An early rally on Wall Street injected some late lift into an otherwise lacklustre day on the London markets.

After struggling to hold on to modest gains for most of the session, the FTSE 100 Index closed 21.6 points up at 4272.9.

The Dow Jones Industrial Average moved higher in early trading after positive US corporate numbers and news that German business confidence had risen to a 32-month high in October.

But uncertainty surrounding the Federal Reserve's interest rate decision expected later in the day kept investors' exuberance in check.

In London, tobacco stocks took much of the attention after BAT unveiled plans to create the sector's second largest company in the US.

BAT, which will take a 42 per cent stake in a merger of its Brown & Williamson business with RJ Reynolds, topped the Footsie risers board with a 12 per cent, or 77.5p, surge to 720p. Rival Gallaher was hard on its heels, lifting 26p to 596p.

Telecoms stocks also rang up big gains. Vodafone was third on the leader board, up 4.25p at 124p, after Verizon Wireless reported strong third quarter results. Fellow industry player mm02 followed suit, advancing 2p to 64p.

Advertising and media group WPP moved 17p higher to 560.5p after third quarter figures showed a two per cent rise in like-for-like revenues.

The blue chip group's three per cent gain also reflected comments that it remained on course for an upturn in business during 2004.

Friends Provident was another riser after it said total new business improved by almost a quarter in the three months to September 30. The 2p gain to 134.5p was weaker than earlier in the session, yet still outflanked other insurers such as Prudential, which fell 0.75p to 448.25p and Legal & General, which remained unchanged at 104.5p.

Elsewhere, figures from oil group BP showing a 25 per cent increase in third quarter profits to £1.7bn failed to impress investors, who sent shares down 4p to 408.5p.

Shell, whose own figures disappointed the market last week, lost 2.25p to 368p.

After rising on news of cost-cutting plans yesterday, Cadbury Schweppes topped the Footsie fallers, down 12.5p at 383.5p.

Outside the top flight, housebuilder Westbury rose 0.5p to 400.5p after half-year bottom-line profits topped expectations.

Troubled football club Leeds United surged 24 per cent, or 0.63p to 3.25p, despite annual pre-tax losses of £49.5m.