A late flurry of programme trade activity involving a fresh switch out of new-economy stocks and into the more defensive old-economy areas of the market helped London's FTSE 100 index scramble into positive territory at the last gasp yesterday.

Few market operators would have forecast such a closing performance by Footsie earlier in the session after more grim news from international TMT (technology, media and telecom) stocks.

The new-economy stocks, mostly made up of the TMTs, suffered another substantial setback, after the latest spate of profit warnings and bad news from both sides of the Atlantic.

The late surge of buying interest saw the FTSE 100 pick itself up from an earlier dire performance when it retreated 57.9 to 5,622.5 and looked like taking a dive towards the 5,600 level.

But a solid opening on Wall Street, where the Dow Jones climbed over three figures not long into the session, and where the Nasdaq looked reasonably secure, was the catalyst for the London market's subsequent recovery, which saw the 100 index 19.2 ahead at 5,699.6.

The late rise by the leaders was not mirrored by the rest of the market, however, which saw the FTSE 250 suffer a sharp reversal and finish 52.3 off at 6,358.9, its lowest level of the day, and the FTSE SmallCap lose 25.0 to 3,030.4, only a shade above its lowest level of the session, 3,028.4. And the worst performer of all the indices, the Techmark 100, dropped 36.67, or 2 per cent, reflecting the latest carnage among the TMT stocks.

After only just managing to cling on to a minor gain on Tuesday, in response to the good news from Oracle, the US software group, it did not take much to pull the rug from underneath the equity market yesterday.

So a profit warning overnight from Tellabs, a US telecoms equipment manufacturer, and a similar announcement from Infineon, the German chip manufacturer, brought an instant response from investors in London's TMT stocks. Bookham Technology, the fibre-optics group, also warned of a downturn in sales.