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Nasdaq, the second-largest US equity exchange, has announced that it is planning to sell its 31 per cent stake in the London Stock Exchange (LSE).

The announcement of the intended sale comes as the US bourse battles to gain control of Scandinavia's OMX exchange.

News that Nasdaq is to sell its £770 million stake in the LSE marks the apparent end of an 18-month fight by the company to take over the London bourse.

The LSE's biggest shareholder had a $5.3 billion offer (£2.7 billion) offer to acquire the bourse rebuffed in March, after building up a stake in the rival exchange as part of its acquisition ambitions.

But in a statement today Nasdaq revealed that its board of directors had authorised the company to "explore alternatives" to divest its stake in the LSE, with JP Morgan and the UBS investment bank appointed to oversee the review of potential sale possibilities.

Announcing its intentions, Nasdaq claimed that "its current stock price does not adequately reflect the value of its stake in the LSE".

The US exchange said that selling the stake would increase its stand-alone earnings per share for 2008 by around $0.30 to $0.35 (£0.15 to £0.18).

However Nasdaq warned that there could be "no assurance" that the review of sale alternatives would result in any transaction.

Analysts say Nasdaq's decision to sell its LSE stake is most likely to have been fuelled by its desire to secure the OMX exchange.

Its $3.7 billion (£1.86 billion) cash and share bid for the Nordic bourse was trumped by a rival bid from Middle East exchange owner Borse Dubai on Friday.

Meanwhile analysts have also stressed that the LSE's proposed merger with Milan's Borsa Italiana is now more likely to proceed given Nasdaq's decision to sell its stake in the London exchange.