London Stock Exchange yesterday batted away a £2.7 billion (€4 billion) "final" offer to be acquired by US-based Nasdaq, saying the bid so undervalued the company its board was not even willing to meet for further discussions.

The announcement sparked tumultuous trading in LSE shares, which closed 6 per cent higher at 1,291p, well above the 1,243p per share offer price. Nearly 50 million shares switched hands.

The price is the minimum Nasdaq has to pay until next May under UK takeover code rules because that is the average price at which it bought its initial 25.3 per cent stake. Nasdaq yesterday increased that to 28.75 per cent, buying the stake of Scottish Widows Investment Partnership, one of the LSE's few remaining long-term investors.

Posturing by both parties is likely to be played out in the coming weeks. Under the code, Nasdaq cannot raise its offer unless either its board recommends a bid or a competing bidder emerges. If it fails to acquire the company, it cannot bid for another 12 months.

The LSE's response suggests it wants to set a value for its shares well above what Nasdaq would be willing to pay, thus keeping its independence.

The offer is the second that Nasdaq has made for the LSE and the fifth approach it has received in the past two years.

Clara Furse, LSE's chief executive, said: "We believe Nasdaq's final offer fails to recognise the outstanding growth record and prospects of our group on a standalone basis, let alone the exchange's unique global position."

In timing its approach, Bob Greifeld, Nasdaq's chief executive, said he was influenced by a sell-off in LSE shares last week. That had been sparked by an announcement from some of its largest customers that they intended to build a low-cost share trading platform that could compete with the LSE.

The US has become fiercely competitive, and technology and new European Commission rules are likely to make Europe follow suit. "The broad context is that this proposed transaction is recognition that the world we knew will be very different in three or four years time," Mr Greifeld said.

However, the recovery of LSE shares is believed to have emboldened Nasdaq to make its move, taking the view that the shares would have fallen further without the prospect of an offer.

The offer gives little to customers who have been pressing for tariff reductions. It simply promises that fees will not be raised for at least the next three years.