A strong performance from the technology sector ensured that the London market was able to build on Friday's rally yesterday.

The technology-heavy Nasdaq market in the US had continued its rebound on Monday while the UK had been closed for the bank holiday, and that helped trading get off to a good start yesterday.

The FTSE 100 climbed steadily and by mid-morning was at its best level of the day, up 85.2 at 6,412.6. As it became clear that Wall Street would open weaker, the blue-chip benchmark lost impetus, but it still finished 46.0 ahead at 6,373.4. That took the gain over the last two sessions to 194 points.

Technology and media stocks led the way, with Psion, BSkyB and Freeserve all gaining more than 10 per cent, while ARM Holdings and Baltimore also made good progress.

The Techmark 100 index of leading technology stocks gained about 4 per cent, rising 153.3 to 3,825.31. There were also good performances from the FTSE 250, up 88.6 at 6,283.2 and the SmallCap, 27.3 ahead at 3,199.5.

Old economy stocks had the worst of it, with banks and defensives such as pharmaceuticals losing ground.

The day's economic data did not give a decisive indication about the Bank of England's interest rate intentions when its monetary policy committee (MPC) meets today and tomorrow.

The purchasing managers' index for April slipped to 50.6, a level that indicates the manufacturing sector is barely growing. Together with last Friday's below-trend first-quarter growth figures, that might persuade the bank to leave rates unchanged.

However, the price index jumped to 64.2, the highest level seen since July 1995. "These readings suggest that we are in that painful part of the economic cycle when growth is past the peak but the high level of capacity use means that domestic cost pressures continue to worsen for some time," said Michael Saunders of Schroder Salomon Smith Barney Citibank.

Meanwhile, the Nationwide house price index gained 1.6 per cent in April, for a total year-on-year rise of 17.5 per cent, far higher than the Bank of England would like.

Richard Iley of ABN Amro said: "A rate rise remains on the cards. The economy is running close to full capacity and, at 6 per cent year-on-year, the labour market is generating pay inflation way above the 4 per cent the MPC is happy with."