FSA chief withdraws from Börse dinner

Callum Mccarthy, the chairman of the Financial Services Authority (FSA), has pulled out of a London dinner to be hosted by Deutsche Börse, to try to prevent speculation that he is taking sides in the auction for the London Stock Exchange.

Callum Mccarthy, the chairman of the Financial Services Authority (FSA), has pulled out of a London dinner to be hosted by Deutsche Börse, to try to prevent speculation that he is taking sides in the auction for the London Stock Exchange.

Last month, Deutsche Börse made a 530p-a-share bid for the LSE, which it rejected. The German group is now considering upping its offer. Euronext, the Paris-listed group, has also said it is considering making a bid.

Mr McCarthy was due to speak at the dinner at Tate Modern on Thursday. The event, arranged months before an offer was made for the LSE, will be the first UK version of a traditional German dinner held by Deutsche Börse in Frankfurt each year and known as the "new year opening".

A spokesman for the FSA said simply: "In the circumstances, it would be inappropriate for Callum to take part."

If a bid for the LSE is successful, the FSA would not have to approve the deal. However, as it is the market regulator and the enforcer of the UK listing rules, it is keen to remain impartial.

The supervisory board of Deutsche Börse meets on Monday to discuss its next move in the battle for the LSE.

While the German company has not ruled out going hostile, its chief executive, Werner Seifert, adamantly denied press claims this week that he had already threatened the LSE with imminent hostile action.

The winner of the LSE auction will create the world's second largest exchange company, after the New York Stock Exchange. However, the loser is likely to be left behind and may itself soon find it is vulnerable to a takeover.

It is Mr Seifert's second shot at the LSE. His first attempt, made five years ago, ended in failure.

Deutsche Börse confirmed yesterday that its supervisory board would be meeting on Monday, but it would not comment on the agenda for that meeting.

Shares in the LSE closed down 4p at 585p yesterday, giving the company a market value of £1.49bn. The stock is trading at a premium of more than 10 per cent to Deutsche Börse's initial offer, reflecting the expectation in the market of an imminent bidding war for the LSE.

Shares in Deutsche Börse fell 0.77 cents to €43.68 (£30.63), completing a drop of more than 2 per cent over the past week. Shares in Euronext have fallen 1.4 per cent over the past five days to €21.91.