Four Canada banks will oppose TMX-LSE deal -sources

* Banks concerned about Toronto as financial center

* TD, CIBC, Scotia, National plan to sign public letter

* Other Canadian financial firms asked to sign

By Pav Jordan

TORONTO, March 9 (Reuters) - Canadian banks will declare their opposition to a proposed $3.1 billion takeover of the TMX Group by the London Stock Exchange , sources said, raising a formidable new obstacle to regulatory approval of the deal.

Four of the country's six top banks have penned a letter outlining their concern that the deal would hurt Toronto's ambitions to become a global financial services hub, two bank sources told Reuters on Wednesday. They spoke on the condition of anonymity because they were not authorized to discuss the matter.

The TMX operates the Toronto Stock Exchange and the TSX Venture Exchange for small-capitalizatioin companies.

""Toronto's hopes to be a global financial services hub could suffer a severe and potentially irreversible setback," a draft of the banks' letter states, according to a report in the Globe and Mail newspaper.

Opposition within Canada's powerful banking industry comes on top of the sharp criticism voiced by provincial lawmakers since the deal was announced last month.

The four banks that will sign the letter - Toronto-Dominion Bank , Bank of Nova Scotia , Canadian Imperial Bank of Commerce and National Bank of Canada - have no interest in the deal.

The other two - Royal Bank of Canada and Bank of Montreal - are advising the LSE and the TMX, respectively.

National Bank, Scotia Bank and CIBC did not immediately respond to requests for comment, and TD and declined to comment.

COMPLEX PROCESS

The LSE/TMX deal faces a complex, multi-tiered approval process at provincial and federal levels.

It has come under heated attack in Ontario, the Canadian province that is home to the nation's financial hub of Toronto. A special committee of the Ontario Legislature is holding a series of hearings on the deal. Officials of two of the banks will testify on Tuesday.

LSE shareholders would hold 55 percent of the combined entity - a transatlantic exchange with market capitalization of about $7 billion. The new exchange operator would have the largest number of mining, energy and other resource companies in its stable of listings.

The TMX and LSE say the deal would help Canadian stock markets maintain their competitive advantage as the global industry consolidates. That will help companies of all stripes gain better access to capital, they say.

TMX Group officials could not be reached immediately for comment on Wednesday.

GMP Capital , AltaCorp Capital, Canaccord Financial and other Canadian financial firms are also being asked to sign the letter, the Globe said.

(Additional reporting by S. John Tilak; Editing by Frank McGurty)