Borsa Italiana moved into the spotlight of European securities market consolidation talks yesterday, with possible bids for the €1.2 billion exchange touted from Euronext and Deutsche Börse.

Euronext, which has agreed to merge with the New York Stock Exchange in a $10 billion (€7.9 billion) deal, said it would start more in-depth talks with the Italian bourse, valued by analysts at about €1.2 billion.

A supervisory board member of Deutsche Börse, whose bid to merge with Euronext has been rejected by the management of the group which runs the Paris, Amsterdam, Brussels and Lisbon bourses, said Frankfurt might launch its own bid for Borsa.

Deutsche Börse shares ended flat, as did Euronext's, lagging an index of the world's 19 top exchanges, which was up 1 per cent.

"Everything is still open," said a trader in Frankfurt, referring to various European bourse merger scenarios.

Stock markets globally are under pressure to cut costs and speed up the execution of transactions, meaning consolidation is likely, according to analysts and others in the industry.

But Italian brokers said trading costs in their market might rise if Borsa Italiana merges with another exchange.

Milan has Europe's cheapest trading, clearing and settlement costs, according to an European Union report published on May 24th.

"We hope Borsa will focus on the themes of efficiency and costs. We don't want to pay more after Borsa merges with another exchange," said Michele Calzolari, the president of the Italianbrokers' association Assosim.

A Euronext spokeswoman said talks with Borsa Italiana would continue: "We will start to discuss more detailed terms." She was responding to a report in French daily La Tribune that it could make a bid for Borsa Italiana today or tomorrow.

The company's executive directors are due to meet tomorrow, according to Pietro Modiano, director general of Sanpaolo IMI Bank and one of the stock market's shareholders.

Borsa Italiana, which has named Euronext as its first choice for a possible alliance, confirmed that talks were continuing.

La Tribune also said Frankfurt was mulling a rival offer. "We do not want to contribute to that kind of speculation," a Deutsche Börse spokesman said.

"But it is quite obvious that Deutsche Börse will review all merger possibilities, especially since Euronext continues to reject Frankfurt's offer," the board member said.

- (Reuters)