SHARES in London managed to continue their recent slow but steady rally yesterday, with the help of some reasonable economic data.

But with some bourses in Europe closed, activity was subdued and the FTSE 100 index traded within a narrow range of 11.5 points.

The British inflation numbers were in line with forecasts, with the headline index down 0.4 per cent month on month and the underlying index (which excludes mortgage payments) down 0.5 per cent.

The annual rate of underlying inflation remained at 2.8 per cent, just outside the government's target band of 1-2 1/2 per cent.

Nevertheless, the figures showed few signs of inflationary pressure.

Gilts rose on the news, although they fell back in the afternoon in line with Treasury bonds, which reacted to stronger than expected US economic data. The benchmark 10 year gilt ended just two ticks ahead.

The US news also hit the Dow Jones Industrial Average, which was around eight points lower at the close of London trading.

The FTSE 100 index was ahead throughout the session, and finished 7.1 points higher at 3,837.4, within 20 points of its all time peak. The FTSE Mid-250 index managed a more modest gain of 4.1 to 4,356.0.

Footsie has now risen by more than 200 points over the past month.

There were a couple of small corporate deals yesterday a £25 million sterling bid for upholstery distributor Rexmore and an offer in the Lloyds investment trust sector.