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UPDATE 1-T-Online skids after losing DAX race

(Adds fund manager quote, detail)

FRANKFURT, Aug 20 (Reuters) - Shares in T-Online International slipped on Wednesday after the Internet provider missed a chance to join Germany's DAX in the latest index reshuffle.

Deutsche Boerse decided late on Tuesday to replace financial services company MLP with tyremaker Continental , surprising those who had tipped Europe's largest Internet provider T-Online as a likely candidate to join the DAX.

"Recently people have been buying both Continental and T-Online on speculation over entry into the DAX but now the results are clear and so short-term investors getting out of T-Online stock again," said Trudbert Merkel, fund manager at DEKA in Frankfurt.

In heavier-than-average volume, T-Online stock traded down 1.9 percent at 10 euros by 0910 GMT.

Continental -- a DAX member from 1988 to 1996 -- leapt to a four-year high at the opening but later erased those gains to reflect a flat blue-chip index.

The tyres and auto-parts maker has managed to ride out the malaise in the global auto industry by shutting tyre factories and focusing on expanding its electronic components business.

Continental Chief Executive Manfred Wennemer on Wednesday told reporters the group was considering making further acquisitions in the medium term.

DAX TRACKERS

Shares in MLP, long-tipped to exit the DAX, reversed an opening fall as market players said its departure from the DAX was already priced into the stock.

In the long-term, inclusion in the blue-chip index is seen bolstering a company's share price by making it a must-have for those fund managers with funds that track the DAX's performance.

Experts estimate that up to 33 billion euros ($36.5 billion) are invested in funds mirroring the DAX or using it as a benchmark.

Continental's promotion to the DAX will soften the prevalence of technology heavyweights in the blue-chip index which already includes Deutsche Telekom, technology giant Siemens and software maker SAP .

Also reacting to Tuesday's index reshuffle, Internet provider Freenet , telecoms firm Teles and semiconductor firm Suess MicroTec all rose around one percent on news they will be promoted to the TecDAX .

Among those set to leave the tech-laden index, Medigene racked up the steepest fall, loosing almost four percent, while the other exclusions Plambeck and Nordex also fell.

Deutsche Boerse's decisions are due to take effect on September 22. The next index revision is due on November 18.

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