December 10, 2012 / 6:20 PM / 5 years ago

Goldman cuts CME Group to 'sell,' cites volume struggle

* Goldman lowers 12-month share price target to $48 from $53

* Headwinds seen for volume across asset classes

CHICAGO, Dec 10 (Reuters) - CME Group Inc (CME.O) will struggle to rebound from low trading volumes next year, Goldman Sachs said, as it downgraded its rating to "sell" for the biggest U.S. exchange operator.

Goldman Sachs, in a note issued on Sunday, also lowered its 12-month share price target to $48 from $53. It had previously rated CME at "neutral."

JP Morgan recently cut its price outlook on CME to $48 from $50. [ID:nWNAB00I5V]

CME declined to comment.

Shares of CME, which operates the Chicago Mercantile Exchange, the Chicago Board of Trade and the New York Mercantile Exchange, were down 1.5 percent at $54.14 on Monday.

"Headwinds across multiple asset classes will likely keep volumes muted," Goldman Sachs said.

Volume at CME was down 21.5 percent year-to-date at the end of November, at 1.3 billion contracts, according to CME data.

Goldman Sachs predicted "muted volume growth" of 2 percent year-on-year in 2013.

Smaller market swings have hurt trading volumes by causing investors to pull back.

Investors typically use futures contracts, which lock in future asset prices at current levels, to bet on or hedge against swings in underlying assets. When they expect lower volatility, they often trade less.

For example, investors see less reason to hedge their interest-rate risk with CME's interest rate products due to the Federal Reserve's pledge to keep rates low for several more years.

(Reporting By Tom Polansek; Editing by Leslie Adler)

((Thomas.Polansek@thomsonreuters.com)(312-408-8556)(Reuters Messaging: thomas.polansek.reuters@thomsonreuters.com)) Keywords: GOLDMAN RATING/CME

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