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UPDATE 1-Deutsche Boerse says first half performance "slightly below" expectations

expectations@

* Earnings for full year seen at "lower end" of forecast range

* Low stock market volatility dampens trading revenue

* Insider trading allegations "are unfounded in all respects"

* Sets aside provisions of 10.5 million euros for possible fines (Updates with details, background)

FRANKFURT, July 26 (Reuters) - Deutsche Boerse said on Wednesday that its first half performance was "slightly below" its expectations and full year earnings were likely to be at the "lower end" of its forecast range.

The German stock exchange operator reported second-quarter net profit of 176 million euros ($206 million), down 4 percent from a year earlier. Revenue was 624 million euros in the quarter, up 4 percent from the previous year.

Deutsche Boerse, whose planned merge with London Stock Exchange collapsed earlier this year, said that trading revenue had been dampened by low stock market volatility and "sustained investor unrest."

"Even though business development was slightly below our expectations, from our point of view it is still possible to achieve the lower end of our earnings forecast for the full year provided that the cyclical environment improves in the second half of the year," Chief Financial Officer Gregor Pottmeyer said in a statement.

Deutsche Boerse has projected that net profit would grow by between 10 and 15 percent in 2017. It expects revenue to rise by between 5 and 10 percent.

Since the merger fell through, Deutsche Boerse has scaled back its ambitious strategy, saying that major mergers were off the table and it was focusing instead on partnerships, small acquisitions and investment.

However, it has been operating under a cloud since the LSE merger attempt with multiple investigations afoot.

Frankfurt's public prosecutor said last week that it was still investigating Chief Executive Carsten Kengeter over allegations of insider trading for shares he bought before merger talks were announced.

Kengeter has denied all allegations of wrongdoing, saying the shares he purchased were part of an official Deutsche Boerse compensation plan. "Insider trading goes against everything I stand for," he told shareholders in May.

In addition, Deutsche Boerse previously said that the prosecutor asked it to pay fines of 10.5 million euros for failing to notify the public promptly about the merger talks with the LSE and over the design of its executive share-buying scheme that allowed Kengeter to buy shares in the first place.

On Wednesday, Deutsche Boerse said it had set aside provisions of 10.5 million euros for possible fines even though it said it "continues to believe the allegations made are unfounded in all respects."

In another probe, a German regional regulator said it was assessing the fitness of Deutsche Boerse management amid the insider trading allegations. ($1 = 0.8532 euros) (Reporting by Tom Sims; Editing by Elaine Hardcastle and Susan Fenton)