Italian bourse boosts LSE profit

The LSE is reaping rewards from a merger with its Italian rival

The London Stock Exchange (LSE) says it is weathering the global credit crunch, with annual profits rising to £235m.

Europe's largest stock exchange also benefited from a merger with its Italian rival, Borsa Italia, last year.

But shares fell more than 5% on the news as investors worry about the LSE's ability to fight off rivals offering cheaper trading systems.

Chief Executive Clara Furse said despite the financial turmoil, the LSE had "delivered excellent results".

LSE, one of the world's largest stock market operators, was the subject of fevered merger activity. America's hi-tech exchange Nasdaq tried and failed to take over the London bourse last year.

The exchange said revenues jumped 56% to £546m and it increased its annual dividend by 33% to 24 pence a share. Shares have fallen about 45% since the start of the year.