Sept. 20 (Bloomberg) -- Dubai, the fastest-growing financial center in the Persian Gulf, will buy stakes in Nasdaq Stock Market Inc. and London Stock Exchange Group Plc to diversify the economy from oil to financial services.

Borse Dubai, founded last month, will get a 19.99 percent stake and 5 percent of votes in Nasdaq, home to Microsoft Corp. and Intel Corp., Nasdaq said today. Dubai will also gain 28 percent of the London Stock Exchange, the biggest U.K. exchange, that Nasdaq is selling after two failed takeover bids. Nasdaq gets OMX AB, the Nordic bourse for which it dueled with Dubai. Qatar later said it bought a 20 percent stake in LSE.

Dubai ruler Sheikh Mohammed bin Rashid al-Maktoum is using record oil revenue and cash from a real estate and tourism boom to invest overseas. Exchanges worldwide have announced more than $64 billion in purchases and ventures since 2005 as they boost electronic trading and reduce costs.

``This seems like a very innovative way for Nasdaq of killing two birds with one stone, finding a buyer for the LSE stake at a reasonable price and combining with OMX at the original offer price they put,'' said Michael Long, an analyst at Keefe, Bruyette & Woods in London.

OMX gained 8.5 kronor, or 3.5 percent, to 249 kronor as of 11:36 p.m. in Stockholm trading. The stock earlier fell as much as 7 percent. It has traded higher than Dubai's initial bid of 230 kronor a share for the past three weeks amid speculation that Nasdaq would have to raise its offer.

Qatar Intervenes

The Qatar Investment Authority issued a statement today saying it bought a stake and doesn't currently intend to make an offer. Qatar, home to the world's biggest gas field, is also seeking purchases abroad and has bid 10.5 billion-pounds ($21 billion) for J Sainsbury Plc, the U.K.'s third-biggest supermarket chain.

``Neither QIA nor Qatar Holding currently intends to make an offer for the LSE but reserves its position in the event that a third party announces a firm intention to make an offer,'' it said.

Borse Dubai will buy OMX at 230 kronor a share, or 27.7 billion kronor ($4.22 billion), and sell the Stockholm-based exchange to Nasdaq for 11.4 billion kronor in cash, Nasdaq said. Nasdaq will in return grant the Dubai International Financial Exchange access to the Nasdaq brand and OMX trading technology. Borse Dubai will also be a beneficiary of about 18 million Nasdaq shares, an 8.4 percent stake, held in a trust for an eventual sale.

``This is clearly better all around'' than only buying OMX, Nasdaq Chief Executive Officer Robert Greifeld said on a conference call with journalists in Stockholm. ``This will strengthen our hand in the Nordic region.''

`Emerging Markets Center'

Nasdaq made a cash-and-stock bid for OMX in May, an approach that was endorsed by OMX management under CEO Magnus Boecker. Borse Dubai, headed by former OMX CEO Per Larsson, trumped Nasdaq's bid in August with an all-cash bid for OMX valued at 27.7 billion kronor.

``Our primary objective is to build a world-class, growth- oriented exchange out of Dubai and to become the center for capital-markets activities in the emerging markets,'' Borse Dubai Chairman Essa Kazim said in the statement.

Dubai's bid for OMX threatened to foil Nasdaq's latest attempt to expand into Europe, after the U.S. market failed to take over the LSE. Greifeld redoubled efforts to gain control of OMX before shareholders could vote on Dubai's superior bid and in August opted to sell the LSE stake to focus on OMX instead.

``London is a wonderful financial capital, but not the right financial asset for us,'' Greifeld said today.

Nasdaq Foothold

Nasdaq is seeking a foothold in Europe after rival NYSE Group Inc. created the first transatlantic stock market with the $14 billion acquisition of Paris-based Euronext in April. OMX would give Nasdaq control of seven Nordic and Baltic exchanges, where the value of shares traded daily has more than doubled since 2003.

Dubai is the second-biggest sheikhdom in the United Arab Emirates after Abu Dhabi, the federation's capital and owner of almost 10 percent of the world's oil reserves. Sheikh Mohammed said in February that Dubai's government is aiming for the economy to grow 11 percent a year to 2015 and to create 882,000 new jobs to offset waning income from its depleting oil reserves.

The emirate last month agreed to invest as much as $5.1 billion in Kirk Kekorian's MGM Mirage, adding to $13.5 billion of acquisitions the emirate announced this year.

The government set up Borse Dubai in August by combining its stakes in the Dubai Financial Market and the Dubai International Financial Exchange. The Dubai International Financial Center, the state-run business park in the United Arab Emirates, is among the owners of Borse Dubai. The center's investment unit in May acquired 2.2 percent of Frankfurt-based Deutsche Bank AG.

Kenneth Shen, the Qatar Investment Authority's head of strategic and private equity, didn't answer calls to his cellphone seeking comment.

To contact the reporters on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net; Will McSheehy in Dubai, U.A.E. at wmcsheehy@bloomberg.net

Last Updated: September 20, 2007 06:32 EDT