LONDON (AFP) - Shares in London closed higher on Tuesday, getting a boost from a rebound on Wall Street as investors hoped another vote on the US financial bailout package will see the plan passed.

Dealers said some modest bargain hunting took the markets off early lows following the massive near seven percent plunge on Wall Street Monday when the 700-billion-dollar bank rescue was voted down.

The FTSE 100 index of leading shares finished with a gain of 1.74 percent to 4,902.45 points.

Vodafone was the most traded stock, seeing 254 million units change hands, followed by the Royal Bank of Scotland, which saw 146 million shares switch owners.

ICAP dominated the board rising 65.75 pence -- or 22.7 percent -- to finish at 355 points, followed by MAN up 31.25 pence -- or 10.2 percent -- to stand at 336.75.

HBOS was the top casualty of the day on reports that Lloyds TSB could seek to renegotiate a proposed takeover of its distressed rival.

An HBOS spokesman denounced the market talk as "pure speculation." Lloyds TSB said it was proceeding with terms of a deal agreed between the pair earlier in September.

The bank lost 19.60 pence -- or 13.8 percent -- to finish at 122.4. The next loser was retailer Marks and Spencer down 6.75 pence -- or 3.24 percent -- to end at 201.5.

The sterling was also weak against the dollar at 16:58pm falling to 1.7801 from Monday's 1.8037. Similarly loosing ground to the euro, 1.2642 from 1.2511.

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