Dubai stock exchange takes Euronext stake

Swirling rumours about merger deals between stock exchanges were given a further twist yesterday when the Dubai stock market operator said it had taken a 1 per cent stake in Euronext.

The Dubai International Financial Centre issued a curious statement pointing out it had taken the stake, "with the full knowledge and agreement of the board and management of Euronext".

Euronext, the pan-European exchange, has been in informal merger talks with the London Stock Exchange for at least a year. It had nothing to say about the Dubai announcement, but sources near the company noted that DIFC did not need any co-operation to take a 1 per cent stake.

The Dubai International Financial Exchange (DIFX) boasts just three companies - Kingdom Hotels Group, the Indian oil services group Man Industries and Investcom, a telecoms business, alongside a handful of index-linked funds and bonds. The exchange, which has just named Per Larsson, the former head of the LSE's former suitor OM Group, as its chief executive, has been in operation since September. The Dubai Stock Exchange, where local companies list, has attracted 30 companies since opening in 2000. DIFX had no comment on whether it was interested in buying other stock markets outright.

Separately, the London Stock Exchange gained almost complete support of investors yesterday for a £510m cashback deal. Ninety-seven per cent of shareholders voted in favour of the payments - part of the LSE's defence against the Australian bank Macquarie.

The chief executive of the LSE, Clara Furse, repeated the mantra that the LSEhas "options", claiming the company is "an attractive merger partner". Shares in the LSE dipped 8.5p to1,251p.