Clement Grenier
Grenier extends his stay with Lyon despite keen interest from Arsenal. (Reuters)

Lyon midfielder Clement Grenier has rejected interest from Arsenal to continue his stay with the Ligue 1 club after signing a new contract.

The France international had been strongly linked with a move away from the Stade Gerland, with Arsene Wenger identifying the midfielder as one player the club had been keeping a close eye on.

But after long-running transfer saga, Grenier, who Wenger has likened to Samir Nasri, has rejected the Gunners' interest to extend his stay with the Remi Garde's side until the summer of 2016.

"My progress at Lyon is not over yet," Grenier said upon signing his new contract, Goal report. "I have had a good last six months but I still have a lot to learn here."

Grenier had been set to enter the last year of his contract with Lyon, and the France international's agent had previously remained coy when quizzed on the future of his client. Grenier himself has confirmed that Lyon turned down an offer from the Gunners earlier in the year, while his agent Frederic Guerra did little to put a stop to speculation.

However, the highly rated midfielder has turned down the overtures of north London, much to the delight of his manager.

"I am very happy to continue working with Clement Grenier," Garde said. "Hopefully we can help him progress further."

Grenier's decision to extend his deal will leave Wenger still in the market for additional midfield options. The continued absence of Abou Diaby, who is sidelined until at least Christmas, suggests a physical presence in the middle of the park will be high on the French manager's priority list.

The Gunners will be boosted however by the prospect of a full season with Jack Wilshere. The England international returned after over a year out last October, providing an immeasurable boost in midfield.

The 21-year-old is now on course to start the 2013/14 campaign fully fit, much to the delight of his club and country teammate Alex Oxlade-Chamberlain.

"Jack is back in training and looking really good," Oxlade-Chamberlain told the London Evening Standard. "He is obviously coming away with us on tour today and the fact that he is looking so strong is good news for Arsenal and England.

"Hopefully he can stay fit because he is an amazing player and can add a lot to our team. Is he the best kind of signing we can make? Yes."