Nasdaq, the New York exchange, has given its strongest indication yet that it has no intention of raising its hostile offer for the London Stock Exchange (LSE) by Friday’s deadline.

The news sent the LSE’s share price into sharp decline, but it recovered after the announcement that Samuel Heyman, the American who is the exchange’s second-biggest investor, had topped up his investment this week.

Mr Heyman now has 10.35 per cent of the LSE, his latest purchase being at £13.14. The shares, below £13 at one stage, ended 10p lower at £13.06. Under the bid deadline, Nasdaq could raise its £12.43 offer by Friday, but only with the agreement of the LSE board, led by Clara Furse, the chief executive.

Both sides were insistent yesterday that no talks that could lead to a higher offer were contemplated, contrary to market rumours that have buoyed LSE shares in recent days. Nasdaq, in the second of two documents yesterday urging acceptance of its offer, insisted that only one meeting had taken place between the two parties, in May 2006, and this was as an investor in the London exchange rather than as a potential bidder.

Ms Furse and her board have refused to negotiate with New York at the current level of the bid, insisting that it undervalues the business.

The two exchanges spent much of yesterday arguing over the sequence of events that led to the failure to hold talks. LSE sources insisted there had been no approaches from Nasdaq. The Americans said that talks had been refused in November, when the offer was renewed, in favour of an immediate rejection.

If there is no final offer, all eyes will be on the LSE share price ahead of the final closing date on February 10. If it stays at or above £13, analysts give the offer little chance of success.

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