FTSE 100 Index: 3830.3 (+6.9); FTSE Mid-250 Index: 4351.9 (+5.8)

THE London stock market once again demonstrated its recent resilience by shaking off an early decline to edge a step nearer its all time closing high.

The day's economic data were not designed to help the equity market. The July unemployment numbers showed a bigger than expected drop of 24,000, albeit on a seasonally adjusted basis, while the underlying rate of annual average earnings growth edged up to 3.75 per cent.

Both figures would appear to reduce the justification for a further interest rate cut, especially as the minutes of the July 3rd monetary meeting show that Mr Eddie George, the governor of the Bank of England, is strongly opposed to another reduction.

Gilts fell back on the news, dragging shares down with them and, at its worst, at 10 a.m., the FTSE 100 index was 10.3 points off at 3,813.1. The Tuesday night weakness on Wall Street, where the Dow Jones Industrial Average fell by 57 points, also weighed on sentiment.

But, for the moment, it seems hard to keep the London market down, and shares duly rebounded. When Wall Street opened stronger - the Dow was 12 points ahead at the close of London trading - the Footsie edged into positive territory, finishing the day at 3,830.3. The all time closing high, recorded on April 19th, was 3,857.1.

The FTSE Mid 250 index also managed a gain of 5.8 to 4,351.9. But gilts did not recover their tosses, and the benchmark 10 year issue finished the day with a fall of three eighths of a point.

Mr Mark Brown, head of strategy and economics at ABN Amro Hoare Govett, said: "Confidence was tested in July and survived and that leads to a bounce back. Equity markets are being supported by the fall in US bond yields from 7.25 per cent to 6.75 per cent and in Britain by liquidity; there has been around £1 billion sterling of share buy backs over the last month."

But Mr Brown doubts whether the Footsie can break out of the top of its recent 3,650-3,850 range and is sticking to his end year forecast of 3,500.

There was a modest sprinkling of corporate news yesterday, BICC's overall loss obscured a rebound in its cables unit and the shares staged a modest rally, but Glynwed, the engineering group, disappointed the market and its shares were the worst performers in the FTSE Mid 250 index.

The best bid story that traders could dream up was a revival of talk of an offer for Schroders. This rumour, which has been around for at least a year, was circulated again only last week. But it was sufficient to make the merchant bank's shares the strongest performers in the Footsie.

Volume was once again subdued with many dealers on their August holidays.