After just managing to close the second quarter with the merest of gains, thereby bringing a halt to five consecutive losing quarters, the first trading session of the third quarter saw the FTSE 100 finish the day in sparkling form after a rather nervous start.

But the beginning of the new quarter drew a less than enthusiastic response from the second and third-ranking stocks, with the FTSE 250 always under pressure and the FTSE SmallCap only just managing to edge into positive territory in the last few minutes of the session.

The FTSE 100 settled a net 74.2 higher at 5,716.7, having been down 27.9 at 5,614.6 at its worst during the day.

The FTSE 250, meanwhile, was finally 9.8 off at 6,289.1, while the FTSE SmallCap edged up 1.2 to 2,923.3. The Techmark 100 added 14.44 at 1,802.63.

It was mostly new-economy stocks - the TMTs - that drove the FTSE 100 up yesterday, with dealers noting plenty of sector rotation taking place and with the old defensive areas of the market having to bear the brunt of most of the selling pressure that emerged.

And Wall Street did its best to boost London, the Dow Jones Industrial Average driving ahead strongly and posting a 136-point gain not long after London closed. The Nasdaq Composite was up 15 points around the same time. Sentiment on Wall Street was being lifted by a higher-than-expected National Association of Purchasing Management manufacturing index reading for June, which came in at 44.7, compared with a consensus forecast of around 42.

Tomorrow brings the start of the two-day meeting of the Bank of England's interest rate-setting monetary policy committee (MPC), with its decision to be announced on Thursday. Shortly after comes the outcome of the European Central Bank's Council meeting in Frankfurt.

Most economists expect the MPC to leave UK interest rates on hold, but a cut in ECB rates is a possibility. The undoubted star of the day was Vodafone, the mobile phones giant, whose shares extended Friday afternoon's rally and eventually finished top of the FTSE 100 performance table after positive press comment and a view that perhaps the sell-off that has seen Vodafone shares slide to their lowest level since October 1998 has been overdone.