LSE shares jumped as much as 10.1 percent to 1,198p on Friday before closing at 1,143p each.

At that closing level, LSE shares trade at 14.3 times 2009 March earnings per share of 79.7p, compared to NYSE Euronext’s 27.5 times, Nasdaq OMX’s 19.5 times and Deutsche Boerse’s 18.5 times.

While the LSE employs some 450 staffs, new pan-European trading ventures such as Nomura-owned <8604.T> Chi-X Europe and Turquoise are running on headcounts of under 40.

While the LSE invested 40 million pounds on its new trading engine TradeElect to deliver sub-10 millisecond latency, U.S. rival BATS spent around $5 million (2.6 million pounds) in building a next-generation trading platform.

"Cost savings potential in stock exchanges appears significant," he Hoffmann-Becking said.

SLOWER GROWTH

Thanks to strong trading volumes in 2007, 6 analysts polled by Reuters forecast on average that the LSE’s operating profit (earnings before interest and tax) before exceptions would jump 48 percent to 274.5 million pounds, and adjusted diluted earnings would rise 31.7 percent to 71.9p, when it posts annual results on Thursday for the year to March.

The outlook for the LSE has turned sour however, amid a downturn in the equity market.

The average daily order book volume in UK stocks was flat in April. And the LSE, which acquired Borsa Italiana in October, saw Italian equities trading volume down 16 percent from a year ago.

Bernstein expects LSE electronic trading volumes to fall 13 percent for fiscal year 2009.

Morgan Stanley, which said 85 percent of LSE revenues rely on cash equities trading, expects yield per trade on the bourse to plunge 28 percent in the year ending in 2009.

Initial public offerings activity, which contributes about 18 percent of the company’s total revenues, is also at its lowest level since 1997.

The 6 analysts polled by Reuters expect a drop in the growth rate of adjusted EPS to 10.8 percent in the year to March 2009.

(Editing by Rory Channing)