Deutsche Boerse's bid was backed by top European politicians

The Frankfurt-based operator had hoped to muscle in on the New York Stock exchange's agreed $10bn (8bn euro; �5.5bn) merger with Euronext.

In a statement, Deutsche Boerse said that it would "stop all preparatory steps including the regulatory and merger control processes".

Euronext operates stock exchanges in Paris, Amsterdam, Brussels and Lisbon.

'No sense'

Deutsche Boerse's rival bid for Euronext had won the backing of French President Jacques Chirac and German Chancellor Angela Merkel.

A "European solution" to consolidation within the continent's stock exchange industry had also won the tacit support of European Central Bank governor Jean-Claude Trichet.

However, Euronext continued to keep Deutsche Boerse at length as it pursued a tie-up with New York Stock Exchange-owner NYSE Group.

"Politicians, stakeholders and regulators across Europe have confirmed their preference for a European solution. Despite this broad support, the Euronext management did not reopen talks with Deutsche Boerse," the German company said.

Deutsche Boerse said that while it remained interested in a tie-up with Euronext, it would now no longer actively instigate such a move.

"We have invested time and commitment, but it is part of our responsibility to recognize when further effort doesn't make sense," said Deutsche Boerse chief executive Reto Francioni.