The London Stock Exchange (LSE) is eyeing a takeover of its US rival Nasdaq just weeks after announcing a merger with the Toronto stock exchange, the Sunday Times reported.

Although the companies have not held talks about a three-way tie-up, LSE and its Canadian counterpart expect to make their move later this year following the closing of their own deal, the newspaper said without citing sources.

For now, LSE has its hands full as it tries to close on its ￡3.1 billion ($5 billion) proposed takeover of TMX Group.

Last week the two exchanges defended their transatlantic tie-up to skeptical lawmakers as they faced the first of a series of government and regulatory hurdles.

But the two exchange operators have said the combined company could go on the offensive as stock market competition intensifies internationally, especially with Deutsche Boerse in takeover talks with NYSE Euronext, and the Singapore Exchange trying to acquire Australia's ASX Ltd.

Some have speculated Nasdaq could jump into the fray, and LSE head Xavier Rolet was non-committal last week when asked whether TMX and LSE would consider a three-way tie-up.

A source told Reuters previously that Nasdaq, left out of the recent merger frenzy, was looking at its alternatives, including the possibility of teaming up with CME Group Inc or Intercontinental Exchange Inc to bid on NYSE.