The LSE appears to have fought off Macquarie's hostile bid

The bank said that after talks with LSE investors and users, it had concluded that it could not raise its offer to a level acceptable to LSE shareholders.

As a result, Macquarie said it would not raise its offer or extend it beyond the current deadline of 28 February.

The LSE had described Macquarie's �1.5bn bid as "ill considered".

Last week, the stock exchange announced a package of measures designed to keep investors on its side, including doubling the amount of cash it was returning to shareholders to �510m, buying back up to �50m worth of its shares and raising its full-year dividend by 71%.

Too expensive

In Monday afternoon trading, the LSE's shares were trading at 834.5 pence, up 10.5p on the day. Macquarie has offered 580 pence per share.

Any hopes that Macquarie would come back with a higher bid were ended by a statement issued by the bank on Monday afternoon.

Macquarie said that since making its offer in December it had "spent considerable time meeting with key LSE shareholders and user groups".

"Following these discussions, MLX (Macquarie's bid vehicle) has concluded that an increased offer on terms acceptable to MLX and its investors is unlikely to be acceptable to LSE shareholders," the firm said.

"As a result, MLX has determined that it will not increase the terms of its existing offer and that it will not extend its offer beyond 28 February 2006."

In December 2004, Germany's Deutsche Boerse made a �1.3bn offer for the LSE, but this was dropped after opposition from its own shareholders.

Rival Euronext, which operates several European stock markets including the Paris exchange, has also been considering a bid.