NYSE Group yesterday struck a deal to buy European bourse operator Euronext for £5.36 billion, beating rival bidder Deutsche Bourse and putting it on track to create the first trans-Atlantic stock exchange.

Termed a merger of equals by the pair, the new company will be called NYSE Euronext and will have US headquarters in New York, international headquarters in Paris and Amsterdam and its derivatives business located in London.

NYSE's chief executive, John Thain, will be chief executive of the combined group.

Pressure has been building on stock exchanges globally to combine to cut costs and increase execution speed. But despite consolidation within Europe and the United States, there has not so far been a major deal linking exchanges in both continents.

Analysts said that, after the deal, the London and German exchanges were now in danger of looking lightweight next to the NYSE/ Euronext combination.

"The latest move in this global game of chess has left the London Stock Exchange and Deutsche Boerse with a strategic problem: Not to act could be dangerous for their futures," said Richard Hunter at Hargreaves Lansdown Stockbrokers.

The LSE yesterday unveiled plans to sell a benchmark-sized, sterlingdominated bond to refinance existing borrowings, but analysts said the world's oldest exchange might have to come up with something more dramatic.

The race kicked off earlier this year when Nasdaq Stock Market, the number two US equities exchange, bid for the LSE, which was rebuffed. It has since built a stake of more than 25 per cent in the LSE, but under UK takeover rules it cannot launch a takeover bid for six months.

However, David Buik at Cantor Index, said: "The Euronext/NYSE deal will take at least six months to consummate, and who knows? The NYSE could buy NASDAQ's 25.1 per cent stake in the LSE, which is heavily leveraged."

Under the terms of yesterday's deal Euronext shareholders will have the right to exchange each of their shares for 0.98 NYSE Euronext shares and 21.32 euros cash. Based on Thursday's close, the deal values Euronext at 7.78 billion euros. Euronext will also pay a previously announced extraordinary distribution of three euros per share.

The companies said NYSE Euronext would have a market capitalisation of about £10.34 billion, putting it ahead of Chicago Mercantile Exchange Holdings.

The NYSE unveiled its proposed offer for Euronext on May 22, but faced a competing cash-and-share proposal from Deutsche Bourse worth 8.6 billion euros that day. Deutsche Bourse was not available for comment.

Jan Michiel Hessels, chairman of the supervisory board of Euronext, said that Euronext's Supervisory and Management Boards had gone through an "extensive process of identifying the best consolidation opportunity for our shareholders, issuers, and users, and we strongly believe NYSE is the best partner".