A rebound in mobile phone company Vodafone helped the FTSE 100 index edge back above 5,400 yesterday but the rally was limited by a poor opening on Wall Street.

Vodafone shares had slipped badly on Friday, as the company said the roll-out of its third generation phones was being delayed. But the group, heavily weighted in the FTSE 100 index, recovered all of Friday's losses.

Adding support to the market was a steady performance from oil leaders BP and Shell, which perked up on talk that OPEC would cut oil production, thereby boosting the crude price, at its next meeting in August.

There was also some good news from the technology sector, as ARM Holdings, the chip designer, beat forecasts with its second quarter results and expressed confidence about the rest of the year. ARM shares were the best performers in the Footsie, gaining more than 16 per cent.

Given the strength of some of the leading stocks, it may seem surprising that Footsie's closing gain was limited to 18.2 points, at 5,405.3. At one point, the blue-chip benchmark was 59.7 ahead at 5,446.8.

But the flow of news from abroad was much less supportive. The Japanese stock market slumped to a 16-year low in the face of weak economic data. In Europe, the German IFO survey of business sentiment fell to its lowest level since 1996 while Infineon, the chip maker, saw no sign of an imminent recovery.

The modest rise in the FTSE 100 was offset by small losses in the FTSE 250 and SmallCap, down 15.4 to 6,069.7 and 1.2 to 2,770 respectively. The Techmark 100 index rose 7.97 to 1,520.87 with the help of ARM.