Blue-chip stocks made some modest gains in London yesterday, but their thunder was stolen again by the medium-sized and smaller sectors of the market, which chalked up more closing records.

The FTSE SmallCap index kept up its remarkable run, gaining ground for the 16th consecutive session and closing 16.1 ahead at an all-time high of 2,853.1. And the FTSE 250 index also managed a new peak, finishing 50.8 higher at 6,173.2. Rounding off another good day for the broad market was the All-Share index, which jumped 20.96 to close above the 3,000 level at 3,001.11.

The All-Share was not in record territory, however, because of the heavy weight of the blue-chip FTSE 100 index. The FTSE 100 did advance on the day, gaining 43.6 to 6,375.7, but it remains about 4 per cent below its best levels.

There was little in the way of economic or corporate news to explain the market's advance, though Wall Street's strong finish on Friday, when the Dow Jones Industrial Average gained 235 points to regain the 11,000 level, gave the UK market some modest upward impetus at the start of trading.

But with New York closed for the Labor Day holiday, London was for once forced to find its own motivation during the afternoon session. There was little guidance for equity traders from gilts or sterling, which were broadly unchanged on the day.

Nor was it easy to claim that share prices were pushed higher due to key decision-makers returning to their desks after the long summer holiday season. Trading volume was just 737.4 million shares by the 6pm count.

The most likely explanation for yesterday's movements was that they represented another twist in a volatile third quarter, which has seen the markets caught between interest rate pessimism and earnings upgrades and takeover activity.