Trichet wants Deutsche Euronext

Euronext is proving to be in hot demand

The head of the European Central Bank, Jean-Claude Trichet, has come out in favour of the Euronext stock exchange joining with Deutsche Boerse.

Mr Trichet said he would prefer this inter-Europe option to Euronext's current agreement to merge with the New York Stock Exchange (NYSE).

"All things being equal, I prefer a euro area option..." said Mr Trichet.

Deutsche Boerse has vowed to press on with plans to buy Paris-based Euronext despite the NYSE merger announcement.

"I prefer a euro area option to other options, and a European option to other options," said Mr Trichet.

"That being said, it is not our responsibility to decide."

Less transaction costs

If Euronext's "merger of equals" with the NYSE is given the go-ahead, it would create the first transatlantic stock market, worth $20bn (£11bn).

Stock exchanges globally are looking to merge as competition for business increases, fuelled by a shift into electronic trading.

A merged exchange has more appeal as traders, investors and issuers are all keen to reduce transaction costs - especially in clearing and settlement.

Paris-based Euronext also has bourses in Amsterdam, Brussels and Lisbon, runs trading and settlement systems in Madrid and Milan, and also operates the London International Financial Futures Exchange.

Deutsche Boerse first announced plans to join with Euronext at the start of the year.

Euronext and the NYSE unveiled their plans to merge on 2 June.

Meanwhiile, the US-based Nasdaq stock market is looking to merge with the London Stock Exchange, but no deal has yet been agreed.