LONDON (AP) _ Sotheby's is celebrating its 250th anniversary in style today - with a giant cake delivered to the auction house by horse-drawn carriage.

''The birthday means we are part of a tradition. How many businesses are 250 years old?'' said New Yorker Diana Brooks, appointed a year ago to preside over Sotheby's and to keep the firm ahead of Christie's, its closest rival in the fine-art auction business.

For the past 11 years Sotheby's has been controlled by A. Alfred Taubman, a Michigan real estate developer.

Sotheby's dates from March 11, 1744, when bookseller Samuel Baker sold a gentleman's library for 826 pounds, then about $4,000. The firm's name comes from Baker's nephew, John Sotheby, who became a partner in the company.

Through its main salerooms in New York City and London and in 11 other cities around the world, Sotheby's last year realized $1.32 billion, up from $1.13 billion in 1992.

Christopher de Hamel is one of the stars behind the scenes. An Englishman reared in New Zealand, he is widely regarded as the world's foremost expert on medieval manuscripts. In his cubbyhole surrounded by books he keeps a bag packed ready to fly off at a moment's notice to see something that sounds good.

''If I worked in a national library I might be asked to examine five or six manuscripts a year and catalogue one or two of them. In this job I see and describe thousands,'' he said.

Books remained the firm's chief business for more than a century. Christie's, founded 1766, was always the first choice of the nobility when aristocrats wanted to sell their works of art.

An old joke in the trade says that at Sotheby's auctioneers are pretending to be gentlemen while at Christie's gentlemen are pretending to be auctioneers.

The architect of Sotheby's dominance since World War II was Peter Wilson, who joined the firm in 1936 after failing as a journalist.

Wilson initiated evening-dress sales and in 21 minutes in 1958 persuaded the black-tie set to part with more than $1 million for seven impressionist paintings, a huge sum at that time.

In 1983, Sotheby's slipped behind because of over-expansion and slumping art prices. Taubman was the rescuing ''white knight'' who then secured control with a consortium of fellow-American art-lovers.

Under Taubman's drive, Sotheby's quickly fought back to No. 1.

''We intend to stay there,'' Mrs. Brooks said.