Deutsche Börse is in advanced talks with NYSE Euronext as part of an all-stock deal that would create the world's largest exchanges operator by revenues and profits.

A deal would see Deutsche Börse shareholders holding about 60 per cent, and NYSE Euronext shareholders approximately 40 per cent of the equity of a combined holding company, based in the Netherlands.

Deutsche Börse shares were up 1.7 per cent at €58.42 just before trading was halted, while NYSE Euronext shares were up 5.1 per cent in New York.

The prospect of a merger comes only hours after the London Stock Exchangeagreed an all-share merger with TMX Group, operator of Canada's largest stock exchange, creating a platform with the world's largest number of mining company listings at a time of surging commodity prices.

A potential deal would create a transatlantic powerhouse in clearing as regulators in both Washington and Brussels are pressing ahead with reform of central clearing for over-the-counter credit derivatives.

Results from the world's largest stock exchanges this week, such as NYSE Euronext, Nasdaq OMX and Intercontinental Exchange, have highlighted lucrative new services such as options and futures, while traditional cash equities businesses have suffered from falling stock market trading volume and fiercecompetition from electronic trading venues.

"Summarising a merger between NYSE Euronext and Deutsche Börse as a defensive move to counter the alternative trading firms' gain in market share would be oversimplifying," said Axel Pierron, seniorvice-president at Celent, a Boston-based financialresearch and consulting firm.

"The M&A trends that we are witnessing are global; after SGX attempted to acquire Australia ASX, and LSE and TMX had discussions, there should be no doubt. The race is on to create regional trading gateways to serve international institutional investors, and the drivers are accelerating."