(Adds background, details, share prices)

NEW YORK, Nov 11 (Reuters) - Moody's Investors Service on Wednesday raised its rating on Nasdaq OMX to investment grade and said it may downgrade NYSE Euronext, the latest sign of changing fortunes as exchanges battle for market share.

Nasdaq (NDAQ.O: Quote, Profile, Research) has been successful in diversifying revenues, integrating mergers and boosting profits, while NYSE Euronext's (NYX.N: Quote, Profile, Research) merger savings have been offset by market share losses and new technology spending, Moody's said in separate reports.

Moody's raised its rating on Nasdaq, parent company of the Nasdaq Stock Market, to Baa3, the lowest investment grade, from Ba1, the highest junk rating.

The rating of NYSE Euronext, the trans-Atlantic exchange operator that runs the New York Stock Exchange, is still four notches higher than Nasdaq's at A2, but Moody's said it is on review for downgrade.

The pace of deleveraging at NYSE Euronext in the fourth quarter of 2009 and through 2010 is expected to be closer to Moody's more pessimistic estimates, the rating agency said.

"Management is currently directing cash flow towards capex, acquisitions and dividends as opposed to debt repayment," Moody's senior vice president Peter Nerby said in a report.

Shares of NYSE Euronext have gained ground on traditional rival Nasdaq OMX this year as the company absorbed a handful of acquisitions and prepared to launch two high-profile data centers next year.

However, NYSE Euronext's leverage has stayed high for an A2-rated firm, Moody's said. Its spending and continued pressure on cash trading transaction revenues are resulting in negligible free cash flow generation year to date, the agency said.