(Adds reaction from D.C. leaders and President Bush in paragraphs five through seven. Adds detail about handgun company stocks in paragraph 14.)

By Mark H. Anderson

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The U.S. Supreme Court by a 5-4 margin for the first time in U.S. history declared the Second Amendment to the U.S. Constitution contains a specific right to individual gun ownership. At the same time the court Thursday rejected Washington, D.C., handgun restrictions, which were the strictest in the nation.

"There seems to us no doubt on the basis of both text and history that the Second Amendment conferred an individual right to keep and bear arms," Justice Antonin Scalia wrote in the 64-page majority ruling. "This meaning is strongly confirmed by the historical background of the Second Amendment."

The ruling significantly restricts the ability of D.C. to tightly control gun ownership and flatly rejects its existing gun laws, enacted in 1976 as the strictest gun control law in the country.

"The Constitution leaves the District of Columbia a variety of tools for combating that problem, including some measures regulating handguns," Scalia said, adding the Constitution bars an absolute handgun ban.

Washington, D.C., leaders put a positive spin on the ruling, stressing at a press briefing that the Supreme Court was limiting the government ability to regulate guns in people's homes and not in public places. "The decision that was handed down today was very narrow and relates only to handguns in homes," Washington Mayor Adrian Fenty said. "The decision on handguns does not reference the legality of handguns carried outside the home."

Council Chairman Vincent Gray said he will press for "the most restrictive regulations that the Constitution will permit" in replacing the D.C. laws thrown out by the Supreme Court.

President George W. Bush, through a statement attributed to his press secretary, said he was very pleased with the outcome. "The president strongly agrees with the Supreme Court's historic decision today that the Second Amendment protects the individual right of Americans to keep and bear arms," the White House statement said. "The president is also pleased that the court concluded that the D.C. firearm laws violate that right."

But the Supreme Court majority fully rejected an absolute bar of individual handgun ownership and invalidated regulations requiring that all guns - handguns, rifles and shotguns - be dismantled and outfitted with a trigger lock.

"We hold that the District's ban on handgun possession in the home violates the Second Amendment, as does its prohibition against rendering any lawful firearm in the home operable for the purpose of immediate self-defense," the majority held.

Justice Scalia's opinion, which thoroughly discusses the legal history of gun ownership going back to the 1600s, said the individual right to own firearms is limited. "Like most rights, the right secured by the Second Amendment is not unlimited," Scalia wrote. "Nothing in our opinion should be taken to cast doubt on longstanding prohibitions on the possession of firearms by felons and the mentally ill or laws forbidding the carrying of firearms in sensitive places."

The majority said laws barring guns in schools and government buildings and laws placing "conditions and qualifications" on the commercial sale of arms are valid.

The issue split the court along conservative and liberal ideological lines, with Chief Justice John Roberts Jr. and Justices Anthony Kennedy, Clarence Thomas and Samuel Alito in the majority. Justices John Paul Stevens, Ruth Bader Ginsburg, Stephen Breyer and David Souter dissented.

Justice Stevens, reading from the bench, took point-by-point issue with the sweeping holdings contained in the majority opinion. "There is no indication that the framers of the amendment intended to enshrine the common-law right of self-defense in the Constitution," Stevens wrote in his dissent.

Shares of two publicly traded firearms manufacturers rose following the ruling. Sturm Ruger & Co. (NYSE:RGR) (RGR) shares increased 2% to $7.48 while Smith & Wesson Holding Corp. (NASDAQ-NMS:SWHC) (SWHC) jumped 8.6% to $5.55. Both companies make some of the most popular handguns and could, at least in theory, see their markets greatly expanded if similar laws in other cities also fall by the wayside.

The Supreme Court had not ruled directly on the Second Amendment in almost 70 years. It also, over time, has offered little guidance on the extent to which the amendment covers individual gun ownership for self-defense, hunting and recreational shooting.

The D.C. law, on the books since 1976, bans handguns, bars concealed weapons possession and requires shotguns and rifles to be registered and then kept unloaded and disassembled or locked.

The law was challenged by six D.C. residents who said they wanted to legally possess handguns in their homes for self-protection. A U.S. District Court threw out the challenge, but a panel of the Washington-based U.S. Circuit Court of Appeals revived one of the claims and ruled a special police officer, the now- retired Dick Heller, was wrongly denied a handgun permit.

The decision affirms a lower court ruling that reached a similar conclusion based on the Second Amendment.

The case is D.C. v. Heller, 07-290.

- By Mark H. Anderson, Dow Jones Newswires; 202-862-9254; mark.anderson@ dowjones.com

(Christina M. Wright and William Spain contributed to this report)

    (END) Dow Jones Newswires   06-26-08 1329   Copyright (c) 2008 Dow Jones & Company, Inc.