A 798 million euro ($1.10 billion) impairment on Greek assets pushed Commerzbank to a third-quarter operating loss and forced it to abandon its target for next year, as Germany's second-largest bank struggles to repay state aid amid euro zone market jitters.

"We continue to be committed to our original operating profit target of 4 billion euros for the group, but on account of the market environment we will be unable to reach this target next year," Chief Executive Martin Blessing said on Friday.

Its shares were indicated 5.9 percent lower in pre-market trade, sharply lower than the 0.5 percent drop forecast for German benchmark index <.GDAXI>.

Commerzbank, which is 25 percent-owned by the German government, said it had a core tier one ratio of 9.4 percent at the end of September and needs to raise 2.9 billion euros to meet capital requirements set out by the European bank regulators.

"We can meet the required capital ratio by, for example, reducing risk assets in non-core areas, selling non-strategic assets or by means of retained earnings and we do not intend to tap new state funds," Commerzbank said.

Having cut exposure to indebted euro zone countries by more than 20 percent to 13 billion euros, including a 52 percent haircut on Greek debt, the Frankfurt-based lender said it would continue reducing its public-sector debt in Portugal, Italy, Spain, Ireland and Greece.

The third-quarter operating loss of 855 million euros compared with a year-earlier profit of 116 million was worse than the 683 million euros loss estimated in a Reuters poll.

Earnings from Commerzbank's core businesses of lending to midsized German companies remained robust.

The Mittelstandsbank, which specializes in financing Germany's medium-sized companies, generated an operating profit of 344 million euros.

For 2012 Commerzbank said it expects a good operating result for its core businesses.

($1 = 0.728 Euros)

(Editing by Hans-Juergen Peters)