DUESSELDORF, Germany (Reuters) - German drug company Bayer AG said Wednesday it was increasing production of its Cipro anthrax treatment as fears mounted in the United States of biological attacks.

"We see signs that demand is increasing," Bayer spokeswoman Christina Sehnert said.

Anthrax scares have swept the United States following a journalist's death from the disease in Florida and news that a second man has been exposed to the disease. Rare in nature, anthrax can be used in biological warfare.

Americans are on high alert following last month's suicide hijack attacks on New York and Washington, which the U.S. administration has blamed on Islamic militant Osama bin Laden.

New Yorkers filled 27 percent more prescriptions for Cipro in the week ending September 28 than last year, according to data from Atlanta-based drug research company NDCHealth.

Sehnert said a mothballed plant would resume production of Cipro, the only orally administered drug recommended for such use by the U.S. Centers for Disease Control and Prevention.

Bayer's output of the drug would increase by 25 percent starting Nov. 1.

Cipro, an antibiotic used for a wide range of bacterial infections, was approved by the U.S. Food and Drug Administration to treat exposure to anthrax in August 2000.

Bayer shares gained 2.2 percent to 34.40 euros by 11:40 a.m. GMT, after touching a high of 34.60.

Other European companies could also see an increased demand for their products as a result of rising concerns about possible biological attacks in the United States.

Shares in Danish biotechnology firm Bavarian Nordic, which makes smallpox vaccine, and British group Biotrace International, which supplies testing kits, have both surged since the September 11 attacks.

Acambis, another UK firm, has seen its stock leap nearly 80 percent on speculation the U.S. government will bring forward orders for smallpox vaccine under an existing contract.

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