French banks pool stakes in Euronext

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A group of French banks have pooled their stakes in Euronext to strengthen their position in the event of a merger or bid for the pan-European exchange.

BNP Paribas, Calyon, Dexia, Société Générale and Caisse des Dépôts et Consignations hold a combined 9.7 per cent stake in Euronext, and will use this to promote lower costs, better liquidity and systems reliability in the event of any mergers or acquisitions.

The London Stock Exchange said it is seeking links with other exchanges. It declined to confirm which exchanges it has been in talks with, but sources close to the talks said Euronext, the pan-European market formed in 2000 by the merger of the Paris, Brussels and Amsterdam bourses, is the most likely partner. The LSE is also believed to be in talks with the New York Stock Exchange.

London is likely to face competition if it does seek a merger with Euronext.Deutsche Börse has confirmed it is pursue a deal with Euronext. Two activist hedge funds, Atticus Capital and TCI, which own almost 20 per cent of Euronext, favour a merger between the two continental exchanges rather than a deal with London.

Two hedge funds, Halcyon Asset Management and Chesapeake Partners, each bought 3 million shares in the LSE yesterday.

Euronext is due to confirm its consolidation plans at its annual meetingon 23 May. It said last weekit was in talks with other exchanges, thought to include the London and Frankfurt exchanges, the NYSE, the Chicago Board of Trade and the Chicago Mercantile Exchange.