London Stock Exchange hit by investor nerves

The LSE says intense competition has cut revenues

Profits at the London Stock Exchange have fallen after the global economic downturn dented investor confidence.

That led to lower trading volumes which helped to cut half-year profits at the exchange by almost 40% to £79m ($132m).

Heightened competition compounded the loss of business, with trading being spread more thinly.

The LSE, like other long-standing European exchanges, has continued to lose market share to other trading systems.

Two years ago, European-wide changes to the way exchanges were regulated opened up the market to newcomers.

The LSE's statement said the competition was intense: "New trading venues with aggressive pricing have contributed to lower equity trading revenues."

The company's monthly share of trading business has fallen off dramatically since the market was opened up in 2007. In January 2008, its UK market share was 96%, that is now down to 58%, according to Thomson Reuters.

Although LSE warned that market conditions remained uncertain for the next trading period, there was one note of optimism. It said the pipeline for initial public offerings, where a company first offers shares to the general public, appeared promising for 2010.