Deutsche Boerse and NYSE Euronext have an agreement in principle on the broad outlines of a merger, but are side-stepping thorny political issues, two sources familiar with the plan said.

Last week, the exchanges revealed the first details of a merger plan that would give Deutsche Boerse shareholders about a 60 percent stake, and name NYSE Euronext's head Duncan Niederauer as chief executive.

The two are hammering out a framework deal which focuses on functions and personalities, with Deutsche Boerse Chief Executive Reto Francioni slated to be chairman.

NYSE Euronext's general counsel, chief operating officer and global head of technology are set to retain their positions in the combined group, two people familiar with the plan told Reuters on Monday.

Negotiations over a name, and where to locate various operations across the two continents, highlight some of the difficulties in bringing together companies that are both operationally complicated and symbols of national pride.

There is an agreement in principle on the broad outlines of the deal, a European source familiar with the deal said.

But other people familiar with the situation said, some other issues -- like that of job cuts in technology -- still need to be worked out in detail.

Past merger attempts have failed over such issues.

A deal is set to be presented to the boards of NYSE Euronext and to the supervisory board of Deutsche Boerse on Tuesday, people familiar with the matter said. Deutsche Boerse will also publish fourth-quarter results on Tuesday.

OUTRAGE

In Germany, the deal is being sold as a German takeover of the NYSE or as a merger of equals. Any suggestion that the NYSE management team will be in control counters that public stance and could create an obstacle to the deal getting done.

Deutsche Boerse risks ceding control to NYSE Euronext , a supervisory board member at the German exchange said.

Just like in the Euronext deal, it will be a matter of time before the Americans take control. We should be wary of this. It won't be possible to undo the deal once it is signed, Johannes Witt, a labor representative, said.

Remarks made on Sunday by U.S. Senator Charles Schumer that a tie-up would give NYSE managerial control served as a warning, he added.

Under Germany's system of corporate governance, companies operate under a two-tier board structure, with a management board, consisting of executives, and a supervisory board which is half composed of labor representatives.

Labor representatives such as Witt play a powerful role in German supervisory boards, which control management boards.

Meanwhile, the financial regulator at the German regional state of Hesse, home to Deutsche Boerse, reiterated that it would seek to preserve the interests of Frankfurt as a financial center, when reviewing the plans.

The regulator, part of the state's financial ministry, bestows the license to operate a stock exchange in the state of Hesse and must approve any merger agreement.

A spokesman for the German Finance Ministry said the role of the national government in the merger would be limited.

France has also voiced worries. Economy Minister Christine Lagarde last week said she was concerned about the impact on the security and stability of financial markets.

She wants to see Paris, formerly home of Euronext, play a key role in the combined group.

(Additional reporting by Noah Barkin and Brian Rohan in Berlin; Writing by Edward Taylor; Editing by Dan Lalor and Alexander Smith)

Germany NYSE Euronext NYSE Euronext