Pan-European exchange Euronext today held the door wide open for a multi-billion pound takeover of the London Stock Exchange as it insisted management would review "all potential strategic options" ahead of its annual meeting next month.

As it again thrust itself to centre-stage in the consolidation of international stock exchanges, Euronext today pointedly refused to rule out pursuing a takeover bid for the LSE, which has recently shrugged off the £2.4 billion attentions of American stock market Nasdaq.

Euronext, led by French boss Jean-Francois Theodore, is seen as the preferred partner for the LSE and its chief executive Clara Furse.

Although Euronext today welcomed the possibility of a "merger of partners" with Deutsche Borse, its former arch-rival, it made it clear this particular tie-up would be the "best possible approach" for the German market, without acknowledging that it shared the same sentiment.

Euronext said it was "prepared to continue ... discussions" with the German stock and derivatives exchange on this basis, although it laid out a series of potential obstacles to a successful deal.

These include the structure of businesses and markets following a merger as well as potential competition concerns among European regulators.

But Euronext, which was formed out of the merger of the French, Dutch and Belgian exchanges, boasted that it had become the "preferred partner for a number of interested parties" now that mergers among stock exchanges have kicked off in earnest.

"As previously stated, Euronext remains committed to examining all potential strategic options with a view to identifying the most attractive and value maximising outcome for all its shareholders and stakeholders," Euronext said.

The exchange, which also includes the Portuguese stock market, said it would "fully inform" shareholders of all available options at its annual meeting in May, and - "to the extent possible, submit a recommendation of a course of action for their consideration".

Today's move by Euronext to "clarify" its position on exchange mergers comes after Deutsche Borse last week appeared to increase the pressure on the French-led market to embrace it with formal talks.

Bringing together the two groups would create a dominant "super-exchange" in Europe that would dwarf the LSE.

However, pursuing a tie-up with London could set Euronext on a collision course with its shareholders, some of whom have been pushing for it to pursue a merger with Deutsche Borse.

Some shareholders, including hedge funds TCI and Atticus, have stakes in both exchanges.

Rebel hedge fund investors in Deutsche Borse helped scupper its bid for the LSE at the end of 2004.

Shares in the LSE lost 1.5p to 1,054.5p in early deals. For full details on LSE shares click here

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