The vision of nuclear power as the answer to dwindling North Sea oil and gas stocks propelled British Energy towards the FTSE 100 Index yesterday.

British Energy, which owns eight nuclear power stations and produces one-fifth of the UK's electricity, will replace mobile phone firm O2 following its £17.7 billion takeover by Spanish rival Telefonica.

The fortunes of British Energy have been transformed since the start of this year, with the value of its shares more than doubling to make it worth £3.5 billion.

This contrasted with a year earlier when it needed banks and bondholders to write off £1.3 billion in debt in return for control of the group in a Government-brokered deal.

Chief executive Bill Coley said promotion to the FTSE 100 Index, which officially takes place tomorrow, was a "key milestone on our recovery journey". The company fell out of the top flight index in December 1999.

British Energy owns two plants at Heysham in Lancashire, along with stations at Hartlepool, Sizewell in Suffolk, Hinkley Point in Somerset, Hunterston in Ayrshire, Torness in East Lothian and Dungeness B in Kent.

Investors have been drawn to British Energy as a debate rages over the importance of nuclear energy. The Govern-ment's Energy Review launched this week could lead to a new generation of stations being built.

Meanwhile British Nuclear Fuels unlocked a potential windfall for the Treasury after a deal to sell its power station construction and services arm. The proposed disposal of USbased Westinghouse to Toshiba has been confirmed by state-owned BNFL. The projected £2.8 billion price has not been confirmed.