The Hong Kong stock exchange agreed to pay £1.4 billion ($2.18 billion) to buy the 135-year-old London Metal Exchange, the world's biggest marketplace for industrial metals, underlining the shift in manufacturing's centre of gravity to Asia.

The deal yesterday - still subject to approval by LME shareholders, who may well reject it - would give Asia's largest bourse a much-needed entry into a commodity trading platform and brings LME members closer to China, the world's biggest metals buyer.

Hong Kong Exchanges and Clearing Limited (HKEx) will finance the acquisition of the exchange, where total traded value was $15.4 trillion last year, through its existing funds and with a £1.1bn bank loan, it said.

'This is a transformational milestone for Hong Kong,' HKEx chief executive Charles Li told a presentation for analysts.

HKEx beat US commodities exchange InterContinental Exchange in the final nail-biting stages of a contest that started last September with around 15 expressions of interest.

At the LME, men in suits and a few women still use arcane hand signals to conduct open outcry trade in copper, aluminium, lead, nickel, tin and zinc around a circular floor in a bland-fronted building on Leadenhall Street, near the Bank of England.

These traditions are prized as an accurate price discovery mechanism although business is also conducted electronically and over the telephone.

The board of the LME was unanimous in its decision to endorse the Hong Kong bid, which will be put to a LME shareholder vote that is likely before the end of July.

For the LME, HKEx offers a fast track into China and will strengthen its position in the major market against the Shanghai Futures Exchange, which trades in base metals.