LONDON - Nasdaq launched its 2.7 billion pound ($5.3 billion) hostile bid for the London Stock Exchange (LSE.L) on Tuesday, appealing directly to investors after being spurned by Europe's biggest stock market.

The Nasdaq market site in New York's Times Square. Ed Balls, seen as the closest ally of Britain's finance chief Gordon Brown, has hinted that he would back a takeover of the London Stock Exchange by Nasdaq. [AFP]

The US exchange, which already owns 28.75 percent of the London Stock Exchange (LSE) and has bid 1,243 pence a share in cash for the rest, said it was seeking acceptances from LSE shareholders by January 11.

Nasdaq unveiled its latest offer for the LSE on November 20. But the London exchange turned it down -- as it has several other bid approaches from a variety of suitors -- within hours, saying it "fails to recognize the outstanding growth record and prospects of our group on a stand-alone basis."

Nasdaq has said it might consider raising its offer if the LSE board agreed to back a deal.

Some analysts believe the LSE may be running out of options after British financial markets broker ICAP (IAP.L) decided not to pursue fresh merger talks.

New York Stock Exchange's owner NYSE Group -- long considered a potential partner for the LSE -- is pursuing a merger with pan-European exchange Euronext (ENXT.PA), while the LSE's past suitors such as Deutsche Boerse (DB1Gn.DE), Australia's Macquarie Bank (MBL.AX) and Euronext itself were all interested when LSE shares were traded at much lower levels.

LSE shares have more than trebled in value over the past two years amid persistent bid speculation, and closed at 1,320 pence on Monday, signaling investors are still hopeful of a higher bid.

The world's stock markets are jostling for partners, under pressure from customers who want lower fees and broader offerings.