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Nasdaq OMX Group Inc and IntercontinentalExchange Inc are expected to soon take their $11.1 billion bid directly to NYSE's shareholders through a tender offer, two sources familiar with the situation said.

The move is seen as the next logical step for Nasdaq and ICE after being rebuffed twice by NYSE, which has refused to open talks on their offer. NYSE favors its existing $10.1 billion deal with Germany's Deutsche Boerse AG.

A direct appeal to shareholders through a tender offer would ramp up the pressure that NYSE is already under, although they also have defenses to keep Nasdaq and ICE at bay.

NYSE, for instance, can institute a poison pill, which would thwart the hostile bid by making it more difficult and expensive for the rivals to buy its shares.

In signs the Big Board is facing growing dissent over its strategy of just saying "no," shareholders at its annual meeting on Thursday approved two proposals that the board had advised against, and directors who were up for election got fewer votes than before.

Investors at the packed meeting in New York urged NYSE management and board to start talks with Nasdaq and ICE, while also asking them to press Deutsche Boerse to sweeten its deal.

"This merger is grossly unfair to the shareholders," said Kenneth Steiner, who owns about 1,000 NYSE Euronext shares. "I voted against the directors. I believe they should be removed and replaced with those who can get us the appropriate value for our shares."

The NYSE board and managers who launched a charm offensive to woo shareholders stuck to their belief that the Deutsche Boerse deal was the better way to go.

Earlier on Thursday, NYSE CEO Duncan Niederauer said he would close the "perceived value gap" between the deals. The Nasdaq/ICE offer is about 10 percent higher than the Deutsche Boerse deal.

Niederauer, a fierce rival of Nasdaq's Robert Greifeld, promised that a combined NYSE-Deutsche Boerse would have much higher earnings, diverse revenues and would cut costs.

With shareholders pushing for a sweeter deal from the German exchange, Niederauer said, "We would hate to miss out on an accelerating opportunity because we just got a touch too greedy on the ratio."

DISRUPTIVE TACTICS

NYSE Chairman Jan-Michiel Hessels called the unsolicited offer from Nasdaq and ICE "illusory" and "fraught with unacceptable execution risk.

"We believe their request for a meeting is a tactic principally designed to be disruptive to our combination and therefore we see no basis for which to meet with them," Hessels said.

NYSE's board took just 10 days to snub Nasdaq this month, dismissing its bid as "strategically unattractive" and warning of heavy U.S. job losses from such a deal.

Eight of nine institutional investors polled by Reuters this week said NYSE Euronext should at least sit down with Nasdaq and ICE.

On Thursday, shareholders approved a proposal that gives investors with just 10 percent of the company's shares the power to call special meetings -- a move that could make it easier for Nasdaq and ICE to pursue their counter-bid if it drags on after a July shareholder vote.

NYSE said it would likely take 12 months to adopt the proposal.

The shareholders reelected the directors with an average of 80 percent support, according to preliminary results. Last year, the directors got more than 90 percent support.

STRONG RESULTS

Separately, Deutsche Boerse said it has no plans to sweeten its offer, but highlighted possible cost savings of at least 500 million euros ($742 million) from the deal.

The target is 100 million euros higher than the initial estimates. Half of the additional savings would come from the technology unit.

Deutsche Boerse and NYSE Euronext also reported strong first-quarter results, topping analyst expectations.

NYSE earned 68 cents a share, excluding items, topping the 60 cents Wall Street expected.

Separately, CME Group Inc said its first-quarter profit rose 22 percent, beating expectations, as the biggest U.S. futures exchange operator handled record trading in energy and grains.

($1=.6817 Euro)

(Additional reporting by Ann Saphir in Chicago and Edward Taylor in Frankfurt; editing by Sophie Walker, Jon Loades-Carter, Robert MacMillan and Andre Grenon)

Another report on Thursday showed a surprise rise in the number of Americans claiming unemployment benefits last week, which could cast a shadow on expectations for a significant pick-up in output in the second quarter.

Growth in gross domestic product -- a measure of all goods and services produced within U.S. borders -- slowed to a 1.8 percent annual rate after a 3.1 percent fourth-quarter pace, the Commerce Department said. Economists had expected a 2 percent growth pace.

Output was also restrained by harsh winter weather, rising imports as well as the weakest government spending in more than 27 years.

"The biggest factor was weather. It hurt consumption and construction. Energy also hurt consumption as well. Higher gasoline prices took a bigger bite out of people's budget," said Stephen Stanley, chief economist at Pierpont Securities in Stamford, Connecticut.

Initial claims for state unemployment benefits jumped 25,000 to a seasonally adjusted 429,000, the Labor Department said. Economists had expected claims to slip to 392,000.

U.S. government debt prices rose after the data, while stock index futures added to losses. The dollar extended losses against the yen and the euro.

The Federal Reserve on Wednesday acknowledged the slowdown in first-quarter growth, describing the recovery as proceeding at a "moderate pace" -- a slight step back from a statement in March when it said the economy was on a "firmer footing."

It trimmed its growth estimate for 2011 to between 3.1 and 3.3 percent from a 3.4 to 3.9 percent January projection.

The U.S. central bank signaled it was in no rush to start withdrawing the massive monetary stimulus it has lent the economy. It confirmed plans to complete its $600 billion bond buying program in June.

ROBUST GROWTH NEEDED

"Coming in at 1.8, to get to where Fed's forecast is, you're going to need some robust growth," said Bob Andres, chief investment strategist and economist at Merion Wealth Partners in Berwyn, Pennsylvania. "In my mind, the Fed's forecast and the Street's forecast are more than likely a little too optimistic."

Growth in the first quarter was curtailed by a sharp pull back in consumer spending, which expanded at a rate of 2.7 percent after a strong 4 percent gain in the final three months of 2010.

Rising commodity prices meant the consumers, which drive about 70 percent of U.S. economic activity, had less money to spend on other items. The report also underscored the pain that strong food and gasoline prices are inflicting on households.

A broader measure of inflation, the personal consumption expenditures price index, rose at a 3.8 percent rate -- its fastest pace since the third quarter of 2008 -- after increasing 1.7 percent in the fourth quarter.

The core index, which excludes food and energy costs, accelerated to a 1.5 percent rate - the fastest since the fourth quarter of 2009 -- from 0.4 percent in the fourth quarter. The core gauge is closely watched by Fed officials, who would like it around 2 percent.

Still, economists expect consumer spending to trend higher in the second quarter, mostly on the belief gasoline prices will not rise much above $4 a gallon on average.

In the first quarter, growth was also curbed by the trade deficit as a need for businesses to rebuild inventories sucked in imports. Export growth slowed.

A widening trade deficit weighs on GDP growth because it shows more U.S. demand being sated by overseas production. Nevertheless, strong import growth has been seen as a sign of underlying strength in domestic demand.

Restocking by businesses picked up pace, with inventories increasing $43.8 billion after a $16.2 billion rise in the fourth quarter. Inventories added 0.93 percentage point to GDP growth. Excluding inventories, the economy grew at a pedestrian 0.8 percent pace, reflecting important pockets of weakness, after a brisk 6.7 percent rate in the fourth quarter.

Business spending on equipment and software gained pace from the prior quarter, but government spending contracted at its fastest pace since the fourth quarter of 1983.

Home building made no contribution, while investment in nonresidential structures dropped at its quickest pace the fourth quarter of 2009. However, motor vehicle output added 1.4 percentage point to economic growth last quarter.

(Additional reporting by Mark Felsenthal; Editing by Neil Stempleman)

Investors awaited a flurry of corporate results on Thursday from companies such as Coca-Cola, Microsoft and Procter & Gamble, as well as the first estimate of the U.S. first-quarter GDP growth. Economists in a Reuters survey forecast a 2.0 percent annualized pace of growth compared with a 3.1 percent rate in the final fourth quarter estimate.

U.S. crude futures rose to their highest in 2-1/2 years and metal prices rallied as the Federal Reserve appeared in no rush to tighten its monetary policy.

The dollar sank to a three-year low against a basket of currencies on Thursday and was at risk of a drop to $1.50 versus the euro, with momentum-driven investors piling in anticipation U.S. interest rates will be low for a long time.

Japan's Nikkei added 1.6 percent while European stocks were up 0.2 percent in morning trade, gaining ground for the sixth straight session, boosted by a raft of strong earnings from firms such as Deutsche Bank and Royal Dutch Shell.

Consumer goods maker Unilever, however, warned of higher commodity costs for 2011 as vegetable oil and chemical prices rose sharply, and said it would cut its own costs deeper to compensate.

Starbucks Corp warned that rising fuel and dairy costs will take a bigger chunk out of earnings than previously anticipated, and offered a full-year forecast that disappointed Wall Street.

Bid target NYSE Euronext, the transatlantic exchange operator, stepped up calls on shareholders to back a $10.2 billion bid from Deutsche Boerse as it unveiled robust first-quarter results.

Japanese consumer electronics giant Panasonic Corp said it was planning 35,000 job cuts over three years to March 2013, nearly 10 percent of its workforce, in a bid to pare costs and keep up with Asian rivals.

The Nasdaq jumped to a 10-year high as U.S. stocks rallied on Wednesday after Fed Chairman Ben Bernanke's dovish comments.

The Dow Jones industrial average gained 95.59 points, or 0.76 percent, to 12,690.96. The Standard & Poor's 500 Index rose 8.42 points, or 0.62 percent, to 1,355.66. The Nasdaq Composite Index climbed 22.34 points, or 0.78 percent, to 2,869.88.

(Reporting by Blaise Robinson; Editing by Hans Peters)