A FRESH burst of takeover news helped revive London's equity market, which made useful ground despite another big opening fall on Wall Street.

Confirmation that Kvaerner, the Norwegian shipping group, is considering a bid for Trafalgar House, the troubled British conglomerate, instantly revived the market's hope that more bids or mergers could be in the pipeline.

The bid rumblings, plus widespread relief that the UK government had just managed to squeak through the Commons vote on the Scott report, provided sufficient firepower to drive the FTSE 100 index up 11.7 to 3,715.9.

The performance of the FTSE Mid-250 index, on the other hand, was something of a disappointment, with the index only managing a mere 3.7 gain and failing to move back through the 4,200 level, eventually closing at 4,198.7. Traders were surprised at the sluggish performance of second liners given the steep rise in Trafalgar House, whose shares raced up more than 20 per cent.

There was plenty of action in the front-line stocks, however to keep the market boiling, notably a share buy-back in Barclays Bank, which helped arrest an early slide in the stock price and gave a substantial lift to market turnover.

Natwest is seen as another potential buy-back stock, while today's results from Standard Chartered are expected to include a 50 per cent increase in the dividend.

The trading session began on a cautious note with the Footsie opening marginally easier as marketmakers eyed the 65-point decline overnight in the Dow Jones Average, only partly offset by the late rally in US bonds.

The government's success after the Scott vote had only a minor impact on sentiment - dealers said a defeat would have been followed by a government victory in a no-confidence vote. But with gilts in reasonably good shape in the wake of T-bonds and ahead of today's £3 billion sterling auction, the equity market began to pick up speed, and the Footsie reached the day's peak, 3,723.2, in midmorning.

Thereafter, the index gradually eased in relatively quiet trading - apart from the Barclays buy-back - to close comfortably clear of the 3,700 level. Marketmakers still see 3,700 as providing a solid floor for the market and view 3,750 as a viable target.