LSE, Nasdaq 'in merger talks'

The LSE has been looking to expand in Europe and the U.S. to increase revenue and reduce costs

LONDON, England -- The London Stock Exchange and the Nasdaq Stock Market are reportedly in merger talks to create the world's biggest equity market.

Talks between Europe's largest exchange and the No. 2 U.S. stock market have been taking place for several months, according to news reports on Wednesday.

An agreement to combine the two operations could be announced in a matter of weeks, Bloomberg news service said, quoting sources close to the talks.

LSE and Nasdaq would not comment when contacted by CNN.

A merger between Nasdaq, which was founded in 1971, and the 229-year-old LSE would create a market with a total value of shares traded of $3.2 trillion. The New York Stock Exchange, currently the world's largest, trades about $2.6 trillion in shares.

The LSE and Nasdaq have in the past said they want to expand into other markets to increase revenue and reduce technology and administrative costs.

The London exchange is competing for listings with German stock exchange operator Deutsche Boerse and pan-European bourse Euronext.

Merger talks between the LSE and Deutsche collapsed 18 months ago, and both failed in separate attempts last year to buy London's LIFFE futures and derivatives exchange. LIFFE was eventually bought by Euronext.

"The talks have moved on. Being isolated in Europe, the London Stock Exchange recognises this is a perfect fit," Reuters quoted a source as saying. "They realise they either had to go with Euronext, Deutsche or go to the United States."