* Setback for Chicago’s 28-year-old gun ban
* Ruling could make gun ownership easier
* Follow-up to Supreme Court’s landmark 2008 ruling
* Investors cheer ruling, send gun maker shares higher (Adds reaction from Chicago, National Rifle Association; adds stock gains)
By James Vicini
WASHINGTON, June 28 (Reuters) - The U.S. Supreme Court on Monday extended gun rights to every state and city in the nation in a ruling likely to spur new challenges to gun control measures across the United States.
The 5-4 ruling could ultimately make it easier for individuals to own handguns in a country that already has the world’s highest civilian gun ownership rate. Some 90 million Americans own an estimated 200 million guns.
Splitting along conservative and liberal lines, the nation’s highest court extended its landmark 2008 ruling -- that individual Americans have a constitutional right to own guns -- to all cities and states for the first time.
The decision extending gun rights, one of the country’s most divisive social, political and legal issues, was a setback for Chicago’s 28-year-old ban on handguns, which now faces new judicial review and is likely to be eventually overturned.
Legal challenges to existing laws restricting gun use in other states and cities are also expected.
Investors saw the ruling as a win for gun makers, pushing shares of Smith & Wesson Holding Corp SWHC.O up 5.6 percent and Sturm Ruger & Co (RGR.N) up 2.2 percent on Monday.
The right to bear arms, under the Second Amendment of the U.S. Constitution, previously applied only to federal laws and federal enclaves, like Washington D.C., where the court struck down a similar handgun ban in its 2008 ruling.
The ruling, issued on the last day of the Supreme Court’s term, was a victory for four Chicago-area residents, two gun rights groups and the powerful National Rifle Association.
“This decision makes absolutely clear that the Second Amendment protects the God-given right of self-defense for all law-abiding Americans, period,” said Chris Cox, the rifle association’s chief lobbyist.
Chicago had defended its law as a reasonable exercise of local power to protect public safety. That law, and a similar handgun ban in suburban Oak Park, Illinois, were the nation’s most restrictive gun control measures.
“We hold that the Second Amendment right is fully applicable to the states,” Justice Samuel Alito concluded for the court majority, ruling that the right to bear arms was a fundamental right.
It could take years of lawsuits before courts draw a clear line between an individual’s right to a gun for self-defense and reasonable government gun regulations to reduce violent crimes like murder, suicide and accidental shooting deaths.
The justices did not strike down the Chicago law directly, but sent the case back to a U.S. appeals court for review, where it appeared likely to be struck down under the ruling.
Gun control advocates had expected the ruling and predicted that reasonable regulations would survive future challenges.
Paul Helmke of the Brady Center to Prevent Gun Violence said, “We can expect two things as a result of today’s decision. ... The gun lobby and gun criminals will use it to try to strike down gun laws, and those legal challenges will continue to fail.”
The court’s four liberal justices dissented.
Retiring Justice John Paul Stevens wrote in a 57-page dissent that the “consequences could prove far more destructive -- quite literally -- to our nation’s communities and to our constitutional structure.”
It was widely seen as one of the Supreme Court’s most important rulings this term, along with the decision in January that corporations can spend freely to support or defeat candidates for president and Congress.
Gun rights could emerge as a key issue at Senate confirmation hearings that started on Monday for Elena Kagan, nominated by President Barack Obama to replace Stevens.
‘LOVE TO KILL’
In Chicago, a clearly disappointed Mayor Richard Daley said he was working on a new gun ordinance now that the Supreme Court had ruled on the city’s handgun ban.
He also took issue with the court’s majority ruling that elected officials were not doing enough to quell gun violence.
“Common sense tells you we need fewer guns, not more guns,” Daley said. “When it comes to Chicago, the court has ignored all that has been done in the past decade to reduce the murder rate and violent crime.”
Daley cited statistics detailing the nation’s level of gun violence: 100,000 people shot each year, eight people dying each day from gunshots, one million dead since 1968, the year Martin Luther King and Robert Kennedy were assassinated.
He said $10 billion a year is spent in the United States on guns and ammunition.
“We can kill more people in America than anywhere else,” a visibly angry Daley told reporters. “We love to kill.”
The Supreme Court case is McDonald v. City of Chicago, No. 08-1521. (Additional reporting by Andrew Stern in Chicago, editing by Simon Denyer and Todd Eastham)