Deutsche Boerse Asia plans sidelined by LSE merger effort

* China, Deutsche Boerse (LSE: 0H3T.L - news) signed JV agreement last October

* Project on ice until LSE merger progress clarified -sources

* Fresh start date could be announced in Q4 -sources (Adds CFETS comment)

By Jonathan Gould and Andreas Kröner

FRANKFURT, Sept 27 (Reuters) - Deutsche Boerse's expansion plans in Asia have been moved to a side track as the German exchange operator focuses on its $27 billion merger with the London Stock Exchange (Other OTC: LDNXF - news) , three sources familiar with the situation said.

China's foreign exchange trading operator CFETS and Deutsche Boerse signed an agreement last October to establish a 50-50 joint venture in Germany to connect their markets and spur product innovation. The plan was to launch the JV this year but this has now been delayed, the people said.

"The project is on ice for now," one of the people told Reuters. "The Chinese side wants to wait to see if and how the merger with the LSE moves ahead."

Deutsche Boerse said the project was continuing. The China Foreign Exchange Trade System, a unit of China's central bank, said: "We have not received information that the other side plans to delay."

Last year's agreement was signed in Beijing at a ceremony attended by German Chancellor Angela Merkel and China's Premier Li Keqiang and was a key part of Deutsche Boerse's plan to develop business with Asia.

Among other things, the JV was aimed at offering renminbi-denominated interest rate and exchange rate products outside mainland China, but the execution of the plans was also very complex, the people said, adding that a fresh start date could be unveiled in the fourth quarter.

The German exchange operator has already faced a setback in its plans to establish its Eurex Asia derivatives exchange and clearing house, which last year was put off until 2017 because of financial market turbulence and software problems.

The Eurex Asia timetable has also moved further down the priority list as the LSE merger takes precedence, one of the sources said.

European Commission competition authorities are expected to give their first assessment of the Deutsche Boerse-LSE merger on Wednesday or Thursday. Deutsche Boerse has already said it expects regulators to say they will need several more months for an in-depth review of competitive implications of the merger. (Additional reporting by Yiming Shen in Shanghai; Editing by Georgina Prodhan and Jane Merriman)