In an article published Monday in the UK Daily Mail, the CEO of the London Stock Exchange, Clara Furse, blames a “risk-averse” political culture for the sale of British assets to foreign predators. She concludes:

“We now live in a society that prizes certainty. Sadly, the City [of London] is increasingly influenced by a political culture that eschews risk, even though it means foregoing the chance of significant reward.

“For instance, despite all the evidence that UK equities deliver much higher returns over any 20-year period, new regulations have forced pensions and mutual funds into relatively expensive government bonds because they appear to be low risk.

[ … ]

“But let’s not be too gloomy. Markets are powerful and adept at overcoming political obstacles and there are signs that the tide is turning.”

Clara Furse clearly has the fate of the LSE in mind here. She berates many British investors for meekly caving in to hostile foreign takeovers rather than “fighting their corners or going on the offensive”.

It’s good to hear such fighting talk from the Chief Executive of an iconic and important British institution.

In the wake of new bidding fever, London Stock Exchange shares have soared to 1122p ($19.40) at 13.20 GMT.

The New York Stock Exchange is believed to be preparing an offer, while Nasdaq is licking its wounds from Friday’s rejection and looks set to renter the lists with a higher bid.

Meanwhile, Paris-based Euronext is set to receive a conditional green light from UK regulators for its own bid.

But will Clara strike first with a move for Euronext on LSE terms?

This blog’s money is on an arrangement with the NYSE sometime soon Watch this space.

The London Stock Exchange has pre-empted a higher bid, including shares, from Nasdaq by rejecting talks about a deal. The New York exchange has hinted that it may be prepared to offer more than the 950p ($16.44) it tabled on Friday.

A telelphone call to Clara Furse from Nasdaq chief, Bob Greifeld, was refused by the LSE boss over the weekend. This tactic, say some, will give the New York Stock Exchange more time to prepare a counter-offer.

The Times (London) says Monday: “The LSE takes the view, sources indicated, that the 950p ($16.44) on offer from Nasdaq was so far behind the exchange’s true value that no talks are necessary. Instead, the exchange is to press ahead with returning £510 million ($882m) to shareholders, a pledge made last year but delayed by the auction for the company.”

The UK Competition Commission will today clear the way for a bid from Euronext, the continental exchanges operator. This will not enthuse Euronext shareholders, though, and now seems unaffordable. Some sort of agreed all-shares deal, however, has not been ruled out.

The LSE share price has soared from below £4 ($6.92) in 2004 to close at 880p ($15.22) on Friday before news of the Nasdaq approach broke. Currently (at 12.36 GMT Monday) the price stands at 1116p ($19.30), a massive rise from Friday.

“The LSE is encouraged in its stubborn approach by the high valuations placed on exchanges elsewhere, especially the US. Sources indicated privately that this had the full support of its main shareholders. ‘They [Nasdaq] are going to have to sharpen their pencils a lot more,’ said one source close to the LSE.”

Today’s Sunday Times, quoting one of Wall Street’s most respected bankers, Jimmy Cayne, chairman of Bear Stearns, claims that London is overtaking New York as the financial capital of the world.

“London is no longer the second city. Right now it is up there with New York,” he said. “Could it overtake New York as the financial centre of the world? It has a shot. The numbers speak for themselves. The last two years were sensational,” said Cayne, a Wall Street veteran.

He also argues that London is thrashing its other European rivals. “There are many, many successful people in this town. Nobody minds getting on a plane to London these days. It’s exciting and the restaurants are great.”

Cayne makes the comments as the London Stock Exchange is fending off bid interest from New York. On Friday it rejected a £2.4 billion bid from Nasdaq, which valued it at 950p a share. Nasdaq’s rival, the New York Stock Exchange, is expected to launch a counter-offer soon.

In a recent survey of market users, London was rated ahead of New York “and outscores the Big Apple in turnover in many markets, including foreign exchange. New York’s strength mainly rests on domestic US equity and bond trading, but that is being eroded”, says the Sunday Times.