Euronext is the latest firm to make a play for LSE

"The approach is at an early stage and therefore does not require a response at this point," LSE said.

Talks with the European stock market and with rival bidder Deutsche Boerse will continue, the LSE said.

Last week, the group rejected a �1.3bn ($2.5bn) takeover offer from Deutsche Boerse, claiming that it undervalued the business.

LSE saw its shares surge 4.9% to a new high of 583p in early trade, following the announcement on Monday.

Bid battle

The offer follows widespread media speculation that Euronext would make an offer for LSE.

Experts now widely expect a bidding war for Europe's biggest stock market, which lists stocks with a total capitalisation of �1.4 trillion, to break out.

Commentators say that a deal with Euronext, which owns the Liffe derivatives exchange in London and combines the Paris, Amsterdam and Lisbon stock exchanges, could potentially offer the LSE more cost savings than a deal with Deutsche Boerse.

Market merger would boost Euronext

A weekend report in the Telegraph had quoted an unnamed executive at Euronext as saying the group would make a cash bid to trump Deutsche Boerse's offer.

"Because we already own Liffe in London, the cost savings available to us from a merger are far greater than for Deutsche Boerse," the newspaper quoted the executive as saying.

Euronext chief executive Jean-Francois Theodore is reported to have already held private talks with LSE's chief executive Clara Furse. Further reports had suggested that Euronext could make an offer in excess of the LSE's 533p a share closing price on Friday.

However, Euronext said it could not guarantee "at this stage" that a firm offer would be made for LSE.

There has been extensive speculation about a possible takeover of the company since an attempted merger with Deutsche Boerse failed in 2000.