The New York Stock Exchange today expressed a strong interest in acquiring a European exchange, with the London Stock Exchange high on its list of potential targets.

John Thain, the chief executive of the NYSE, said it was keen to participate in the consolidation of European exchanges and indicated that an acquisition rather than a joint venture was his preferred strategy.

He expressed bemusement at the Macquarie quest to acquire the LSE: "I don’t understand the Macquarie bid."

The NYSE has a short-list of three potential targets: the LSE, Deutsche Boerse, and Euronext.

The New York exchange is still digesting Archipelago, the American based electronic exchange, and is unlikely to be in a position to bid until the deal formally closes, in either late February or early March.

"We will be a participant in the consolidation of European exchanges. There are synergies. It will make it easier for investors to invest in both places," he said.

"We will be well positioned to participate in the consolidation that I think is going to take place, both in the US and globally, particularly I think in Europe.

"Right now we're focusing on getting the Archipelago deal closed and integrating that. But I would expect to see us play a leading role in the consolidation that is taking place in the industry."

Mr Thain said that other benefits of an acquisition would be easier listing for European companies and the consolidation of technology between the NYSE and a European exchange.

A joint venture alone is not attractive to the NYSE, Mr Thain made clear. "Joint ventures tend to be hard to make work. It is harder to get the synergies in a joint venture," he said.

"I do think there should eventually be linkages between the US and Europe. I'm optimistic about our positioning in the exchange space."

The NYSE chief indicated that he saw some strong advantages in a potential merger with the LSE, as the two exchanges shared commonalities and compatibility of their business models. In contrast, Euronext had a more diverse range of products and was a less obvious partner for New York’s "Big Board".

Mr Thain’s vision of the future evolution of exchanges on both sides of the Atlantic includes an expectation of greater consolidation of trading in types of financial instruments. He suggested it was all but inevitable that investors would want to trade stocks and derivatives through the same exchange.

At present there is one definite bidder for the LSE, one possible and a third that has been forced to walk away. Macquarie, the Australian bank, has tabled a 580p-a-share, £1.5 billion offer for the London exchange.

Since the bid arrived before Christmas, the LSE share price has shot ahead to levels that make its success almost inconceivable, and the offer has been rejected by the LSE. The price is currently 705 1/2p. There is some scepticism in the market that Macquarie can justify a significantly higher offer.

Sitting on the sidelines is Euronext, which operates four Continental exchanges including Paris. The company, which has indicated a wish to bid for the LSE but not named a price, is currently negotiating with the Competition Commission various understakings it must give before a firm offer can be made.

The company should be free to bid by mid-February. But hedge funds speaking for a quarter of the equity have said they oppose any London link, which could be sufficient to block a mandatory shareholder vote on a formal offer.

The third bidder, Deutsche Boerse, indicated it would pay 530p a share in December 2004 but was forced to pull out of the running three months later after a shareholder revolt which cost the heads of the two senior executives at the Frankfurt exchange.

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