Borse Dubai has signalled its willingness to sell its stake in the London Stock Exchange (LSE) to Qatar, opening the door to a deal that would end a simmering rivalry between Dubai and Qatar over London's bourse.

However, it was unclear whether Qatar was interested in an offer that effectively would amount to a stake swap between the Gulf neighbours after Qatar's decision to sell its stake in OMX, the Scandinavian stock exchange, to Dubai this month.

Essa Kazim, Borse Dubai's chairman, said yesterday: “If the Qatari Government wishes to strike a deal in the future, then it would be subject to negotiation.”

His comments marked the first public acknowledgement by a senior Borse Dubai executive that a long-rumoured reciprocal deal could be in the works.

When the Qatar Investment Authority (QIA) sold its 9.98 per cent stake in OMX to Borse Dubai last week, analysts believed that a reciprocal deal over the London exchange was off the table because Qatar had expressed no interest in acquiring Dubai's LSE shares at the time.

Yesterday Mr Kazim said that Borse Dubai had not agreed to any deal “whatsoever” with Qatar on selling its stake in the LSE. However, his comments suggested that a share sale could be negotiated.

Borse Dubai and the Nasdaq exchange in New York are expected to close a $4.9 billion (£2.5 billion) deal to buy OMX. Upon completion, Borse Dubai would transfer OMX to Nasdaq in exchange for a 19.9 per cent stake in the newly forged company. It would also acquire Nasdaq's existing 28 per cent stake in the LSE.

A slice of those shares could be sold then to Qatar, which at present owns 15 per cent of the LSE through the QIA, a $60billion sovereign wealth fund that apparently would use its LSE stake to expand its own capital markets.

The QIA has raised its profile in recent years by investing in Britain and other overseas markets, including the United States, Asia and Latin America. The fund is seeking to build up its assets to secure future wealth for the country's tiny population of less than a million people when its oil reserves run out.

When Qatar snapped up a 20 per cent stake in the LSE on the heels of Dubai's buy-in last year, it sparked a bitter competition between the oil-rich neighbours. This led to a series of complex deals involving Borse Dubai, the QIA, Nasdaq and OMX over their competing controls over LSE shares.

As recently as December, Qatar was believed to be in talks with Borse Dubai, seeking to raise its stake in the LSE by trading its 10 per cent stake in OMX for some of Dubai's LSE shares.

Although the Middle Eastern investors are the largest shareholders in LSE, their stakes were diluted by last year's purchase by LSE of Borsa Italiana, its Italian counterpart.

Soud Ba'alawy, the deputy chairman of Borse Dubai, said: “Selling LSE shares is not in our short-term horizon.”

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