Under the two-year agreement, Netcenter will use Digital City's local news, weather, movie and entertainment listings. America Online, the No 1 online service, and Netscape said the Digital City guide will be available on Netcenter in the next 60 days. Financial terms were not disclosed.

Putting America Online's 50 local city guides onto Netscape's Web site is aimed at boosting advertising revenue for both companies.

Netscape has been working to establish itself as a portal, or gateway, to the Internet while Dulles, Va-based America Online is seeking ways to boost sales since it went to a flat-rate pricing plan two years ago.

"This gives Digital City one of the top two portals and it gives Netcenter local content to make its home page moreuseful," said Bill Bass, an analyst at Forrester Research in Cambridge, Massachusetts. "Its a good deal for both of them."

The Internet has produced a bumper crop of competing portal sites led by Yahoo! Inc the top portal, which is closely trailed by America Online. Personal computer software giant Microsoft Corp will soon move to No 3 with its own offering, Bass said, leaving Netscape, Infoseek Corp and Excite Corp to slug it out for fourth place.

"Its a tough battle and theres not going to be enough revenue sitting around to support more than three or four of these portals," Bass said.

Bass forecast that online advertising would reach $8.1 billion by 2002, with portals garnering about 30 per cent, or $2.43 billion of that. He added that he expects more than half of the $2.43 billion will be captured by Netscape and Yahoo!.

Netscape and America Online's Digital City will also integrate local community building features such as message boards and real-time chat, which has become a popular feature onYahoo!'s Web site.

Under the agreement announced on Monday by both companies, Mountain View, California-based Netscape will be responsible for national advertising within the service and Digital City will sell local advertising.