The FTSE 100 index staged a decent rally yesterday, breaking its run of four loss-making sessions, with the help of a buoyant start on Wall Street. While the technology-heavy Nasdaq index had fallen sharply on Thursday, both it and the Dow Jones Industrial Average moved up sharply in early trading yesterday.

That helped the old economy stocks in the market, but there was no relief for the recently-beleaguered technology sector. The FTSE Techmark 100 index fell 70.87 points to 4,330.87. That was well off its worst for the day but still left the index 24.7 per cent below its peak on March 6th. Credit Suisse First Boston's quantitative analysis team says that, despite the recent revival of old economy stocks, the gap between the two halves of the market remains very wide. "Thirty-five old economy stocks still have implied medium-term growth rates of 0 per cent or less, while 23 new economy stocks are expected to grow at 20 per cent plus in the medium term."

CSFB adds that investors are picking up good quality stocks in the old economy companies where the market consensus is for some growth in the medium term and where that conviction is supported by a robust trend in recent earnings forecasts. Some of the old economy stocks to attract investors yesterday were BAT, Rio Tinto and BP while new economy stocks in the line of fire included Thus, Telewest and Sage.

The FTSE 100 index had a brief wobble in early trading, falling 59.4 points to 6,385.8. But it quickly recovered and closed 95 ahead at 6,540.2. Over the week, the blue-chip benchmark was 198.3 points or 2.9 per cent lower.

But the rally was not broadly-based. Across the overall market, 1,121 stocks finished higher and 1,243 lower on the day. The FTSE 250 index dropped 41.9 points to 6,475.1 while the SmallCap fell 14.4 to 3,350.1.

Investors are a little nervous ahead of next week's monetary policy committee meeting, although only nine out of 36 economists polled by Reuters expected an increase in interest rates. The mpc left rates on hold at its last meeting in March but the committee members may react to the increased public spending announced in the Budget or to the latest data on surging house prices. Yesterday's trading brought an end to the first quarter, which was dominated by the divergence between old and new economy stocks.