A rebound in financial stocks, some encouraging interest rate news and a healthy Wall Street all helped the FTSE 100 index mount one if its periodic rallies yesterday.

Blue-chip shares were stronger from the start after the Dow Jones Industrial Average had regained the 10,000 level at the US close on Monday. And when Wall Street opened yesterday, both the Dow and the tech-heavy Nasdaq composite made further progress.

British investors were also cheered by the growing perception that the Bank of England was taking a more dove-like line on interest rates. Mr David Clementi, the Bank's deputy governor, had indicated late on Monday that there could be a delay before the monetary policy committee decided to raise interest rates again. That seemed to bear out the measured tone of the bank's recent quarterly inflation report.

All this pushed the FTSE 100 index up to 6,232.6, a gain of 133 points and its third triple-digit rise in the last five sessions. But those gains have been interspersed with a couple of bearish days in what has been a very volatile period for the British market.

It is not just the leading index that has been gyrating wildly. Investors remain underweight in the four largest sectors of the market telecoms, banks, oil/gas and pharmaceuticals.

Technology stocks were not as popular as recently yesterday with the Techmark 100 index advancing only 7.39 to 5,132.23. And small and medium-sized stocks also failed to keep up with the blue-chips; the FTSE 250 rose just 5.9 to 6,451.2 and the SmallCap 15.1 to 3,336.0.

British investors have been caught in recent weeks between worries about rising interest rates on both sides of the Atlantic and some reasonably good news from the British corporate sector.

IBES, the information company, says that British corporate earnings growth is expected to be 8.3 per cent for the 1999 calendar year and 15.7 per cent for 2000. Figures for last year have been better than expected but analysts have been trimming their 2000 estimates.

Recent falls in the London market have brought the FTSE 100 index into fair valuation territory, according to IBES. The IBES model compares the prospective price-earnings ratio with the 10-year bond yield; the FTSE 100 was overvalued by 14.4 per cent last month, but only 6 per cent now, within the normal range.

Turnover showed signs of tailing off after the recent frenzy with 2.1 billion shares traded by the 6 p.m. count.