NASDAQ, the New York market, tightened its grip on the London Stock Exchange last night by taking its stake above the key 25 per cent level, as the race to take control of Euronext gained pace.

Speculation was mounting last night that Euronext, the operator of four continental exchanges, and the New York Stock Exchange (NYSE) were in the final stages of merger talks, having reached agreement on several key issues over the preceding 24 hours. Sources suggested that an announcement could be made within days.

Meanwhile, Deutsche Börse yesterday came out with a plan for an agreed merger with Euronext that would cede much control of the merged business to the Germans. And Borsa Italiana in Milan indicated that it was not willing to be left out of the consolidation action, with Euronext seen as its chosen partner.

Dissident shareholders in Euronext increased the pressure on Jean-François Théodore, its chief executive, to do a deal with one party or another.

In London, Nasdaq bought a block of shares in the LSE representing about 1 per cent of its equity, pushing its stake to more than 25 per cent. The American exchange is not allowed to renew its bid for London until the autumn, after walking away from an earlier offer, but under takeover rules it can raise its holding to a maximum of 29.9 per cent by then.

Clara Furse, the LSE chief executive, has spent the past 18 months either talking to or fending off suitors, including the Börse and Euronext. But Nasdaq is in pole position, its current stake enough to force any other bidder to pay a high premium. The stake also allows it to block a number of significant moves that would be required by any other buyer after a successful bid.

Nasdaq paid an average of £12.35½p per share, lower than the £12.48 paid in earlier share raids. LSE shares advanced 9p to £12.45p, at which price the exchange is valued at £2.7 billion. The LSE had no comment to make yesterday.

Ahead of Euronext’s crucial annual meeting on Tuesday, a group of dissident hedge funds have indicated that they will take action to vote the existing management out of office if there is no firm offer on the table from any potential bidder at the meeting.

The Börse proposals, which would have the combined group based in Frankfurt, were dismissed by Euronext as “nothing terribly new”. The dissidents want a tie-up with the German exchange but are also pressing, as an alternative, for a transatlantic link with the NYSE.

John Thain, the NYSE’s chief executive, has expressed an interest in buying a European exchange, and a source indicated last night that talks between him and M Théodore were “quite far advanced”.

BLUEPRINT FOR EURONEXT

Deutsche Börse’s merger proposals include:

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