FRANKFURT, Germany (AP) -- The London Stock Exchange and the Deutsche Boerse, which are working on their own merger, said Monday they intend to explore the possibility of a full merger with U.S.-based Nasdaq to create a global exchange.

  The two European exchanges, to be called iX, said when they announced their plans in May that the union would include a co-operation agreement with the technology-heavy Nasdaq market.

  In a memorandum to shareholders, who will vote on the merger later this year, iX said the partners are currently working on a joint venture agreement with Nasdaq, but ultimately aim for something more.

  "The parties also intend to take substantial cross-shareholdings in each other and will work together thereafter to explore a full merger of interests to create a global exchange," the document said.

  The proposed alliance would compete with one proposed by the New York Stock Exchange, the Toronto Stock Exchange and others to create a round-the-clock global trading system.

  London Stock Exchange chairman Don Cruickshank later backed off slightly on that possibility at a news conference, saying there was a lot of work ahead for such a merger to come off.

  At a separate news conference in Frankfurt, Deutsche Boerse chief Werner Seifert said Milan and Madrid were hoping to join iX next year, which would give iX a market share in Europe of 70 per cent.

  But he said a "powerful" partner in the United States -- and Asia as well -- would be necessary to allow for trading across time zones around the world.

  He said he wouldn't rule out an eventual merger between iX and EuroNext either, referring to the merger of the Paris, Amsterdam and Belgian bourses announced this spring. "We need a European bourse, and Paris is a highly attractive market," he said.

  However, he said both Frankfurt and Paris have a lot of work ahead of them arranging their own mergers before any further deals could be undertaken.

  "Complexity grows disproportionately the more partners a merger includes," Seifert said, mentioning time-consuming legal and regulatory hurdles.

  The various ventures reflect pressure on Europe's national stock markets to consolidate after last year's introduction of the 11-country euro currency and increased competition from U.S. markets and electronic traders.

  Under the Anglo-German merger, shares in blue chip companies would be traded in London and shares in the high-tech firms in Frankfurt.