UPDATE 2-Deutsche Boerse profit drops as trade levels plunge

* Deutsche Boerse Q3 EBITDA down 38 pct to 243.7 mln eur

* Revenue 500.9 mln eur vs Reuters estimate of 524 mln eur

* Reaffirms cost guidance target, sees 2010 at same level (Recasts, adds further details, background)

By Tyler Sitte

FRANKFURT, Nov 5 (Reuters) - German stock and derivatives market operator Deutsche Boerse (DB1Gn.DE) reported a 37 percent drop in third-quarter operating profit, trailing market expectations as trade volumes continued to shrink.

Deutsche Boerse followed a trend set by its peers. Only one of the five major exchanges reporting over the last two weeks, ICE (ICE.N), had revenues and profits grow. [ID:nN02465172]

NASDAQ OMX Group (NDAQ.O) reported a third straight quarterly drop in profit on Thursday. [ID:nN04461668]

Deutsche Boerse's core cash equity market continues to struggle against new multilateral trading facility (MTF) competitors, and pricing pressure is eating at its earnings.

The group, whose rivals include NYSE Euronext (NYX.N) and CME Group (CME.O) as well as Britain's London Stock Exchange (LSE.L), posted earnings before interest, tax and amortisation (EBITA) of 243.7 million euros for the quarter to end-September, down from 385 million euros a year earlier.

Analysts had on average expected EBITA to fall 35 percent to 281 million euros, a Reuters poll showed. [ID:nLU093658].

Group revenue fell around 18 percent year-on-year to 500.9 million euros due to significant decreases in trade volume in the group's Xetra cash equites and Eurex derivatives segments.

Sales revenues in both these segments fell by 37 and 26 percent, respectively.

Analysts had on average seen total revenues falling 15 percent to 524 million euros.

Deutsche Boerse said it would continue to follow strict cost control guidance and reiterated its cost target of 1.280 billion euros for 2009.

It also targeted keeping 2010 costs under this limit.

BOERSE'S SHRINKING SLICE OF THE PIE