Nasdaq, the American exchange operator, further increased it stake in the London Stock Exchange today, while rival Deutsche Boerse said it was prepared to make concessions designed to build a merger with rival Euronext.

Nasdaq bought a further 2.2 million shares in the LSE. The £27.5 million deal saw Nasdaq edge up its stake in the London exchange to 25.1 per cent, from 24.1 per cent.

Nasdaq has steadily increased the size of its holding in the LSE after withdrawing a proposed £2.43 billion bid for the City exchange in March.

The LSE rejected that approach, saying it undervalued the business.

However, breaching the 25 per cent threshold could give Nasdaq the power to block any strategic defensive moves by LSE management, which usually require the approval of 75 per cent of shareholder.

"This is increasingly looking like a one-horse race. You’d need to be very brave to take on a company that’s 25 per cent owned by a rival," Katrina Preston, a Bridgewell Securities analyst.

Nasdaq has built up its LSE stake in four steps since the end of March.

But under UK takeover rules, Nasdaq is barred from making a bid until September 30 unless the LSE agrees to be taken over, or unless another would-be buyer comes forward.

In afternoon trade, LSE shares were up 7p at 1,243p, valuing the company at about £2.7 billion.

Meanwhile, Deutsche Boerse, the operator of the Frankfurt stock market, signalled it is prepared to make concessions to Euronext to persuade the operator of the Amsterdam, Brussels, Paris and Lisbon exchanges to merge their operations.

Euronext responded by saying it saw "nothing new" in the merger-of-equal proposals, made after several months of discussions between the two groups.

Among Deutsche's proposals was the creation of a new parent company in Amsterdam and the divestment of its cash equity clearing activities to a separate company.

"There is absolutely nothing new in these proposals," said Antoinette Darpy, the Euronext spokeswoman, adding that the group will discuss the offer next week.

Euronext has embarked on talks with other suitors including the New York Stock Exchange, the world’s biggest equity market, which is looking hard for a European partner.

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