After a dire first half, some life returned to the new issues market in the third quarter, crowned by the high profile flotations of Freeserve, the service provider, and Kingston Communications, the Hull-based telecommunications operator.

These two companies accounted for about half of the total £1.24bn that was raised via 19 flotations in the three months to September 30.

For the first time this year, the new company listings outnumbered the launches of investment trusts - by 10 to nine. In the same period last year, 12 new issues raised just £426m, according to KPMG Corporate Finance.

KPMG, however, warns that, while the outlook is better, conditions remain tough for smaller companies operating outside the glamour areas such as technology and communications.

"We are not seeing a change of heart by fund managers. Unless you are a technology company, it will be an uphill struggle for any smaller company to float," says Neil Austin, head of new issues at KPMG Corporate Finance.

"A few more companies are now considering flotation but some of the hopefuls are likely to be disappointed," he adds.

Kingston raised £393m, more money than any other company in the period. Its shares also got off to a spectacular start. They were priced at 225p, at the top end of the offer price range, but closed at 293p on their first day of trading and had soared to 431p by mid-October.

At the offer price, the group was valued at £789m, compared with expectations of up to £650m.

Freeserve, the internet service provider which was set up by retailer Dixons a year ago, suffered from volatile markets for technology stocks after its debut at the end of July.

It raised £229m in a flotation, priced at 150p, that valued it at £1.51bn.

The shares peaked at 244p in August shortly after the debut, but fell sharply in September, hitting 135p at one point. But, by mid-October, they had recovered again, and were trading slightly above their issue price.