May 20 (Bloomberg) -- Thomson Reuters Corp.'s London shares are 14 percent cheaper than the stock traded in Canada, offering traders a possible opportunity to profit from the difference, according to analysts at UBS Investment Research.

Thomson Reuters, formed by Thomson Corp.'s $15.9 billion purchase of Reuters Group Plc, began trading April 17 in London as Thomson Reuters Plc and in Toronto as Thomson Reuters Corp. While both represent claims to the same cash flows, the London stock trades at a discount to the Canadian shares, UBS said.

``The law of one price, which argues that identical assets should trade at the same price, should apply,'' analysts Stephen Cooper and Dennis Jullens wrote in a note dated May 16. ``In the highly integrated and liquid markets of today, the movements between dual-listed stocks should be strongly correlated.''

Investors can bet that the gap will close by buying the London stock and selling an equal amount of borrowed Toronto shares, according to the analysts, who track accounting and valuation issues. Still, the trade carries the risk that the spread may stay the same or increase for long periods of time, they said.

UBS ``cannot think of a fundamental explanation for the difference'' between the stock prices, Cooper and Jullens wrote.

Polo Tang, the UBS analyst who follows Thomson Reuters, has two recommendations on the company -- a ``hold'' rating on the London shares and a ``sell'' on the Canadian stock -- because of the price discrepancy.

Toronto, London, New York

Thomson Corp. was based in Toronto before the merger, while Reuters had its headquarters in London. The combined company is based in New York, and its shares are traded in Toronto, New York and London.

Thomson Reuters's London shares closed May 16 at 1,655 pence, or C$32.22, while the Canadian stock finished at C$37.56. Stock markets in Canada were closed yesterday for a holiday. The New York shares ended in line with the Canadian price.

Similar spreads existed when Royal Dutch Shell Plc had separate listings in the Netherlands and the U.K., Cooper and Jullens wrote. The company was combined into one listing in 2005.

Thomson Reuters spokesman Frank DeMaria declined to comment.

To contact the reporter on this story: Peter Branton in London at pbranton@bloomberg.net.

Last Updated: May 20, 2008 10:11 EDT