A revival in financial stocks failed to sustain the recent blue-chip rally yesterday in the face of an early sell-off on Wall Street.

But although the FTSE-100 index finished the session with a loss, the smaller and medium-sized areas of the market managed to forge ahead.

Once again, there were some volatile moves in individual stocks as investors juggled their preference for the growth prospects of technology and telecoms with the attractions of bargain-hunting amid the old economy groups.

The bank and insurance sectors, heavily sold off earlier in the year on fears of higher interest rates and Internet-based competition, were the big movers of the day. The top six performers in the FTSE-100 index were all financial groups.

The FTSE-100 index started the day in fine form, rising 54.8 to 6,264.1 in early trading, on relief that Wall Street had stood up well to Thursday's warnings of higher interest rates from Mr Alan Greenspan, chairman of the US Federal Reserve.

But the rally petered out later in the day as Wall Street opened lower, with the Dow around 80 points off as the London market closed.

The blue chip benchmark ended the day 44.3 points lower at 6,165.0, slightly down on the week. However, things looked as if they might get a lot worse on Tuesday, when Footsie briefly dropped below the 6,000 level. Worries about the potential for higher interest rates in both the UK and the US appear to be holding back share prices.

The FTSE 250 and SmallCap indices kept up their momentum, however, with the former gaining 53.9 to 6,298.4 and the latter 53.7 to 3,254.3.

Although there was the odd sign of a sell-off in some technology stocks, such as Psion and Durlacher, there was little indication that investor enthusiasm for the sector was dwindling.

"That the high-tech sectors have fared so much better against this seemingly hostile backdrop [of higher interest rates] can be explained by two influences," says Richard Jeffrey, Charterhouse group economist.

"First, the level of private sector activity has been abnormal and may not have fully taken account of the risk facing such companies. More significantly, however, institutions have been wary of shunning areas of the market with potentially huge growth prospects despite the exceptionally high valuations of these sectors. In a sense, the secular attractions of the high-tech sector have wholly dominated any cyclical vulnerability they might have."