Last checked at 
* Deutsche Bank says subdued markets to hit Q3 revenue
* Sees Q3 sales and trading declining significantly
* Deutsche Bank slowdown mirrors broader market trend
FRANKFURT, Sept 25 (Reuters) - Deutsche Bank warned that investment banking revenue would be significantlylower in the third quarter and it will set aside more money todeal with litigation.
"We currently anticipate debt sales and trading revenues inthe third quarter to decline significantly from last year," said Co-Chief Executive Anshu Jain, speaking at an investorconference in London on Wednesday.
Deutsche Bank shares fell 3 percent by 1432 GMT, underperforming the sector index which was 0.7 percentlower.
Jain blamed the lack of market activity for the weakerrevenues. Last year trading had received a boost from stimulusmeasures by the European Central Bank, which made a pledge to do"whatever it takes" to safeguard the euro, a statement that ledmarkets to rebound.
The current slowdown in bond market trading has been blamedon expectations that the U.S. Federal Reserve would begin tounwind some of the extraordinary stimulus measures such as abond buying programme.
JP Morgan analysts forecast that Deutsche Bank'sthird-quarter revenue from fixed income, currencies andcommodities (FICC) could fall 31 percent on the year to 1.6billion euros ($2.2 billion).
Barclays said last week income in July and Augustwas down 500 million pounds ($802 million) from a year ago,mainly due to weakness in its FICC division.
Deutsche Bank and Barclays are Europe's top fixed incomefirms and each gets about 55 percent of its investment bankrevenue from FICC.
Deutsche Bank's efforts to shed around 250 billion euros inassets had not impacted investment banking revenues, Jain said.Deutsche had no plans to sell individual businesses as part ofits effort to cut down its balance sheet, he added.
Jain said the equity sales and trading division continued toperform well in the third quarter and that the divisions ofprivate and business clients, global transaction banking andasset and wealth management are performing in line withexpectations.
On litigation Jain said: "We anticipate taking additionallitigation reserves."
He added that there were "no new themes", but that Deutschehad watched other banks reach settlements with regulatorsleading the Frankfurt-based lender to "draw inferences."
In its second quarter earnings report, Deutsche Bank saidlitigation provisions were 630 million euros. For litigationissues which were remote but may still have a significant impacton the group, it had earmarked a further 1.2 billion euros.
Unlike rivals Barclays and UBS, Deutsche Bank hasnot yet reached a settlement over allegations it was involved ina scam to manipulate global benchmark inter-bank lending rates.
Separately, Commerzbank CEO Martin Blessing saidat the same conference that the lender's 2013 outlook remainedunchanged and that due to an ongoing asset reduction programmeand low interest rates revenues were expected to remain underpressure and provisions for bad loans were expected to rise.
Shares in Commerzbank lost 6.9 percent by 1436 GMT asinvestors fretted over the lender's slow progress in reducingits 347 billion euros book of non-core assets.
