UniCredit SpA should hold off making a bid for Commerzbank AG until the second half of next year to avoid triggering a mandatory cash offer, according to analysts at Jefferies Financial Group Inc.

UniCredit has further hedged potential downside risks on its stake in rival Commerzbank by signing financial derivative contracts with Jefferies to keep its options open, a person close to the matter said.

UniCredit SpA is taking out additional protection on its existing holdings in German lender Commerzbank AG and securing optionality for any future moves, people with knowledge of the matter said.

By John O'Donnell and Francesco Canepa LONDON/FRANKFURT (Reuters) -Germany is working to frustrate a possible takeover of one of its biggest banks by an Italian rival, a stance that pits Berlin against Rome and Europe's regulators,