Reuters - Gains in defensive stocks helped the FTSE 100 higher on Wednesday, with markets set to remain reactive to snippets leaking out of a European summit where investors hope the continent's leaders will agree a plan to tackle the debt crisis.

London's blue-chip index <.FTSE> rose 18.52 points, or 0.3 percent to 5,544.06 by 09:05 BST, albeit in choppy trade, having fallen 0.4 percent the previous session on concerns any agreement out of the summit may undershoot expectations.

Prospects for a comprehensive deal to resolve the euro zone debt crisis at Wednesday's summit looked dim, with deep division on critical aspects remaining, including how to give the region's bailout fund greater firepower.

Expectations have been toned down and there's some nervousness that Europe will fall short of expectations, David Morrison, market strategist at GFT Global, said.

Morrison said there is a feeling Europe will again make broad sweeping statements that the situation will be fixed, but will pass the buck over to the G20 economies and look for further help from the International Monetary Fund.

Analysts at Nomura said they expect markets to remain reactive to EU headlines on bank recapitalisation, the EFSF bailout fund and Greek private sector involvement.

The recapitalisation of European banks and a 50 percent haircut on Greek debt seems to be on the cards, and could be just enough to ease investor concerns, a London-based trader said.

But the market will also look for measures to ringfence Italy and Spain from any contagion effect. If deemed inadequate, we could see a return to the volatility of three months ago.

Traders said a sell-off is a concern, which is capping gains. The FTSE has rallied as much as 12 percent over the last two weeks, albeit mainly on short-covering.

Highlighting investor caution, defensively perceived stocks were the main thrust on the upside as fund managers continued to sit on the sidelines awaiting news out of Europe.

British American Tobacco , the world's second-biggest cigarette maker, rose 0.9 percent after increasing sales by 7 percent in the first nine months of the year, following its price rises to offset an overall demand decline.

Peer Imperial Tobacco was up 1 percent.

Drugmaker Shire rose 0.9 percent as Societe Generale upgraded it to buy from hold on the basis of upcoming launches and our conviction that high-quality, defensive stocks offering strong growth will become increasingly valuable.

Peer GlaxoSmithKline added 0.5 percent ahead of results due out around 12:00 BST. AstraZeneca reports on Thursday and Shire's results are expected on Friday.

Precious metals miners Fresnillo and Randgold rose as much as 2.6 percent.

Investors bought the equities as a proxy for gold, which has gained over the last four trading days as demand for assets offering protection against disappointment out of Europe has risen.

Miners <.FTNMX1770> gained slightly, with traders putting this down to bargain hunting on the previous session's losses.

ANALYST IMPACT

Broker recommendations had a significant impact on stock moves as investors sought legitimate reasons to trade ahead of any announcement out of Europe.

Next slipped 2.1 percent as Deutsche Bank downgraded the retailer to hold from buy on valuation grounds, while retaining its 2,780 pence target.

Marks and Spencer fell 1.1 percent as Nomura cut earnings forecasts, saying a disappointing first half is principally a function of a greater-than-expected squeeze on consumer spending power and near-term operational inflexibility.

British consumer goods group Reckitt Benckiser shed 2.2 percent as ING cut it to hold from buy after warning of slower growth on Tuesday.

Smiths Group and Whitbread were among the heaviest fallers after losing their dividend attractions, combining to take 0.5 points off the index.

On the domestic macroeconomic front, October's CBI industrial trends survey will be released at 1000 GMT, with an unchanged reading of -9 forecast.

(Editing by David Hulmes)

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