Around midday in London, Freeserve shares were up 42 pence, or 20%, at 252p.

They went on to close at 247.5p - 37.5p higher on the day and well ahead of their low of 134.5p on 28 October.

Analysts said Freeserve had been attracting interest as investors grew more hopeful about its long-term prospects and expanding subscriber base.

Miles Saltiel, a technology analyst with West LB Panmure, said: "I think Freeserve is responding to strength throughout the US and European markets over the course of the last few days."

"Liquidity has been moving into specific sectors. Now the money is reaching UK ISPs," he said.

He said Freeserve's fundamentals had not changed, so the duration of the advance would depend on how long funds continued to flow into the market.

"We have a little bit of fever going through these stocks."

Online shopping

On Monday, Freeserve released details of a survey it had carried out suggesting that the number of people shopping online would increase by almost 50% before the end of the year.

The survey said almost 5 million people in the UK were already shopping this way, and that another 2 million were expected to take to the web over the next few weeks.

Freeserve posted a closing high of 244p on 2 August, well above its initial public offer price of 150p. But it was hurt by competition concerns as hordes of other subscription-free ISPs joined the market.

Research groups say there are now about 200 free ISPs in the UK.

Consolidation

One analyst said speculation about consolidation within the internet sector could be helping to push Freeserve higher.

"There's about 200 floating around at the moment and some have a very low level of subscriber numbers and they're probably not making any money," he said.

"So if there's a trend towards consolidation in the industry that would be good news for Freeserve."

In September, Freeserve reported that its subscriber base had soared to 1.5 million but its losses had increased to £5.2m.