MIAMI, Feb 24 (Reuters) - Florida appeals judges on Thursday refused to undo a gag order in a high-stakes smokers class-action trial, shrugging off claims by cigarette makers that a ban against talking to reporters was confusing Wall Street.

Cigarette makers are readying for a possible megaverdict in the Engle case being heard in a Miami courtroom. A liability verdict last July in the case, named after a pediatrician with emphysema, knocked billions of dollars off tobacco stocks. A lawyer for Philip Morris and other defendant companies said on Wednesday that the gag order might aggravate any stock drops if a jury fixes potentially massive damages in the case, possibly as early as March. But a three-judge panel of Florida's Third District Court of Appeal said in a terse written ruling that the cigarette companies had shown no reason to lift the order, which has been in place since the landmark case began in October 1998. ``The record does not reflect a change in circumstances to justify granting defendants' motion,'' the judges wrote. ``... We conclude that the (gag) order under review does not violate defendants' First Amendment rights.'' Floyd Abrams, a leading constitutional lawyer representing the tobacco companies, said the gag order issued by Miami trial Judge Robert Kaye impinged on the free-speech rights granted by the First Amendment of the U.S. Constitution. Some restrictions on contacts between reporters and parties were permitted in order to ensure a fair trial, another right contained in the centuries-old Constitution, the framework for much U.S. law, the judges ruled. The lawyer for the smokers, Stanley Rosenblatt, said the gag order had been put in place to ensure a fair verdict and had in no way inhibited news coverage of the trial. The Engle case on behalf of 500,000 or more sick smokers in Florida is nearing the end of a penalty-fixing phase to set compensatory damages for three plaintiffs and punitive damages as high as $200 billion or more for all the ailing smokers. A six-person jury, the same one now weighing cash awards in a follow-up phase, ruled that smoking caused many illnesses and that U.S. cigarette makers were liable for the suffering and premature deaths of thousands of smokers in Florida.

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