Mumbai: Nasdaq Stock Market Inc, which is locked in a $4 billion bidding war with Borse Dubai for control of Nordic exchange OMX, will relinquish its £797 million pound stake in the London Stock Exchange, five months after its failed takeover bid.

New York-based Nasdaq, which needs overseas acquisitions to gain an international presence, said it wants to sell its LSE shares, but could not guarantee that it would.

Nasdaq, which bought into LSE over time at an average of about 11 pounds a share, reported a paper profit of $245.2 million last year.

Nasdaq said the sale of LSE stake would boost its 2008 earnings per share by about 30 cents to 35 cents each. That would lift Nasdaq's 2008 earnings per share and lower its price-to-earnings multiple.

Nasdaq said it would use $1 billion of the sale proceeds to retire senior debt and use the reminder to buy back shares.

Borse Dubai's offer for OMX represents a 13 per cent premium to Nasdaq's offer of 0.502 shares of its shares plus 94.3 crowns in cash for each OMX share.

Since Nasdaq's failed bid, the LSE has agreed to acquire Milan exchange Borsa Italiana for 1.6 billion pounds ($3.16 billion), a deal that would dilute Nasdaq's stake to about 22 per cent.

OMX owns exchanges in Sweden, Denmark, Finland, Iceland and the Baltic states.

Nasdaq's cash-and-share offer has eroded due to a fall in share prices, which at last week's close represented roughly 204 crowns for each OMX share, compared with Dubai's all-cash bid of 230 crowns.

UBS and JPMorgan are helping Nasdaq decide what to do with the 61.3 million LSE shares.