The London Stock Exchange has backed away from a controversial plan to move towards trading shares in euros, a central plank of its merger proposal with Germany's Deutsche Borse.

The retreat came as opposition to the merger became more vocal yesterday. It coincided with attempts by the two stock exchanges to address the concerns of investors and brokers worried at the costs and regulatory confusion of a combined Anglo-German stock market.

The merger is seen as an essential step in creating a more unified European capital market and bringing the cost of trading shares down to US levels. But there is uncertainty about issues such as regulation and the division of powers between London and Frankfurt.

The two exchanges had said the "aim" was for all European equity trading ultimately to be undertaken in euros. But Mr Don Cruickshank, who becomes LSE chairman next week, suggested this aim was no longer valid and that the currency a stock was traded in was up to investors.

He told an all-party Treasury committee of British MPs the statement could be omitted from an information memorandum the LSE is preparing to send to its shareholders. It needs the support of 75 per cent of them to approve the merger.

In a statement after the hearing, Mr Cruickshank said the new exchange, to be called iX, would need "to offer trading in a company's shares in the currency which best meets the needs of investors and other users of the market."

IX would ensure that sterling prices were still available for investors, newspapers and indices. "We have no agenda" to abandon trading in sterling, he insisted.

His comments coincided with a warning from a board member of the Bundesbank that Frankfurt would be diminished as a financial centre if there was any attempt to backtrack on the two exchanges' proposal to locate a new European market for growth and technology stocks in Frankfurt.