FRANKFURT (Reuters) - Deutsche Bank has nominated its chairman for a second term after an internal probe cleared him of accusations that he was partly to blame for the bank's poor cooperation with authorities in a probe into rate-rigging, a source close to the bank said.

Paul Achleitner was nominated at a meeting of the lender's supervisory board in late October, the source said on Sunday. Shareholders will vote on the extension of his term at the annual meeting next spring.

Several shareholders said on Friday that a renewal of Achleitner's contract was imperiled by Deutsche's poor earnings and faltering share price.

"The bank needs stability and continuity," said the source about his nomination.

Last year, Germany's largest lender agreed to settle a case over the alleged manipulation of interbank rates such as Libor for a record $2.5 billion with U.S. and British authorities, which had accused the bank of obstructing their investigation.

The regulators squarely blamed senior staff for misleading them and ordered Deutsche to fire seven employees.

Some shareholders held Achleitner and other board members responsible for the bank's poor cooperation in the seven-year global investigation, which led to it having to pay more to settle the case than other lenders.

Now an internal probe has concluded that Achleitner did not breach his duties in the handling of the probe, the source said, confirming a report earlier in the Sueddeutsche Zeitung.

Deutsche Bank declined to comment.

A motion calling for an additional external investigation was voted down at the annual general meeting in May.

Any evidence of wrongdoing would have made it an uphill battle for Achleitner to secure a second term as chairman.

Deutsche is still investigating some former top executives, the paper said.

(Reporting by Arno Schuetze and Kathrin Jones; Editing by Clelia Oziel)