Deutsche Boerse won't make a decision on a higher bid for NYSE Euronext until the U.S. exchange's board reacts to last week's counter-offer from Nasdaq and IntercontinentalExchange, sources said.

The German exchanges operator is also waiting to see how credit rating agencies score Nasdaq's move, two people familiar with Deutsche Boerse's strategy said on Monday.

Rating agencies as well as the NYSE Euronext board have not yet reacted to the offer, so it's far too early to say what Boerse's next move will be, said one of the two sources.

Deutsche Boerse unveiled its $10.2 billion takeover of NYSE Euronext in February -- aiming to form the world's largest exchange operator as part of a wave of tie-ups in the increasingly competitive and global exchange world.

Nasdaq and ICE on Friday bid $11.3 billion for NYSE Euronext in an effort to trump the German exchange operator's deal, and pushed their case with an appeal to U.S. patriotism.

Their counterbid, which was unveiled to some skepticism it can succeed, would redraw the world's capital markets so that Americans have a stronger hand than Europeans as exchange operators globally maneuver to come out on top.

A spokesman for Deutsche Boerse declined to comment. Earlier, in response to a report in German newspaper Die Welt that the exchanges operator would not raise its bid, the spokesman said the company strongly believed a merger of Deutsche Boerse and NYSE Euronext was the best possible combination.

Shares in Deutsche Boerse dropped 1.5 percent to 52 euros by 0858 GMT on Monday morning.

Analysts said the counterbid left it looking vulnerable -- either it retaliates with an expensive counterbid or risks losing an opportunity to grab market share and economies of scale as the global exchanges M&A heats up.

If Deutsche Borse intends to be back in the merger they have to raise the price substantially including a potential cash component which would be negative in our view, said DZ Bank analyst Matthias Duerr.

LBBW analyst Martin Peter downgraded Deutsche Boerse to hold from buy on the grounds of uncertainty over whether it would raise its bid.

At the same time, he said, the Nasdaq/ICE offer was still seen as shaky.

It will be hard for Nasdaq to eliminate the existing doubts regarding synergies, leverage, and valuation as well as regulatory and political issues, Peter said.

WestLB and Commerzbank also cut their ratings on Deutsche Boerse.

DEAL OVERHAUL?

Deutsche Boerse's deal may have to go through a dramatic overhaul to satisfy European regulators' antitrust concerns and appease U.S. lawmakers resistant to a foreign owner.

Nasdaq and ICE's counterbid dodges those problems but comes with a bunch of fresh ones including Nasdaq's high levels of debt.

Deutsche Boerse could afford to pay more for NYSE than Nasdaq and ICE can if it wants the deal badly enough, according to another source familiar with the matter. Nasdaq has less capacity to take on debt than other exchanges, putting constraints on how much it can afford to pay.

But upping its offer would make it less easy for Deutsche Boerse to sell a NYSE deal as a merger of equals.

A combination of Nasdaq and NYSE's businesses would create a company with a monopoly on listing U.S. public companies and dwarf other U.S. options markets, which one source close to the Big Board said raises concerns about antitrust issues and the certainty of closing the transaction.

(Reporting by Ludwig Burger and Edward Taylor, writing by Sophie Walker; Editing by Jon Loades-Carter)

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