Deutsche Boerse challenged LCH.Clearnet and raised the prospect of a price war with the clearing house affiliate of rival Euronext in the battle to buy the London Stock Exchange.

Deutsche Boerse signalled it would use LCH.Clearnet, which clears UK share trades, as a tool to win over user support for its takeover bid.

The Frankfurt exchange said that if it bought the LSE, it would renew LCH.Clearnet's one-year contract only if the clearing house cut its fees by half.

The predatory move could end up wiping LCH.Clearnet off the UK stock market map, industry insiders said.

Euronext owns just over 40 per cent of LCH.Clearnet. The Anglo-French clearing house said on Thursday it had no comment.

Deutsche Boerse was making details of its £1.3 billion offer for the LSE public, saying it would keep CrestCo as the settlement house for UK trades under a long-term contract.

The clearing and settlement of UK trades after a merger has become a flash point for users who fear being forced to switch to Deutsche Boerse's in-house clearer Eurex Clearing and settlement unit Clearstream.

"Our intention is to clear and settle via LCH.Clearnet and Crest, but I think in the interests of the London user community, LCH should think and can think... about price reductions in exchange for us extending the contract we have with them," said Deutsche Boerse Chief Executive Werner Seifert.

When asked what Deutsche Boerse would do if LCH.Clearnet refused to cut its fees, Mr Seifert said that was a hypothetical question.