The London Stock Exchange Group Plc (LSE) said on Sunday it believes the European Commission is unlikely to provide clearance for its merger with Deutsche Boerse AG, after LSE's board concluded it would not be able to meet the regulator's demands.

The announcement by LSE, which also operates the Milan stock exchange, is the latest twist in its longstanding attempt to merge with the German stock exchange operator.

LSE said in an emailed statement that the Commission had asked it to sell its stake in Italian fixed income trading platform MTS by February 27 to satisfy anti-trust concerns over the merger of Europe's two largest stock exchange operators.

However, LSE said its board had concluded it could not commit to such a sale. "The LSEG Board believes that it is highly unlikely that a sale of MTS could be satisfactorily achieved, even if LSEG were to give the commitment," LSE said in a statement.

The London Stock Exchange did not put an end to the possibility of a tie-up, however, saying it would continue to take steps to gain merger approval.

Deutsche Boerse, which also operates the Luxembourg-based clearing house Clearstream and the derivatives platform Eurex, confirmed the decision on MTS and said a final decision from Brussels was expected within weeks.

"The parties will await further assessment by the European Commission, and will currently expect a decision by the European Commission on the merger of DBAG and LSEG by the end of March 2017," Deutsche Boerse said in a statement.

The planned merger has drawn criticism from France, Belgium, Portugal and the Netherlands, fearful for their own stock exchanges, owned by Euronext.

Last month, LSE agreed to offload the French arm of clearing house LCH to European rival Euronext, as part of efforts to address EU competition concerns. LSE said on Sunday it viewed the LCH sale an "effective and capable" remedy to competition concerns, deeming the MTS demand "disproportionate". 

An LSE-Deutsche Boerse merger would create a financial markets behemoth competing with the likes of the Chicago Mercantile Exchange and ICE in the United States, as well as the Hong Kong stock exchange in Asia.

Fears over such a deal have already scuppered two attempts at a merger in 2000 and 2005. Beyond competition concerns, the proposed merger has also been shaken by Britain's decision last year to leave the EU, which has created uncertainty around London's status as a European financial capital.

(With inputs from Reuters and AFP)