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European regulators on Thursday ruled against allowing a patent on developing human embryonic stem cells, a decision that could stifle research by stem cell companies for commercial purposes.

An appeal panel at the European Patent Office upheld a June decision to reject a patent application regarding the use of stem cells filed by the Wisconsin Alumni Research Foundation in 1995.

Stem cells taken from days-old embryos work as a type of master cell for the body, capable of changing into many types of tissues and cells.

Opponents call the research immoral because it requires the destruction of the embryo but advocates say it is an important route to explore for potential cures for conditions such as diabetes, Parkinson's disease and spinal cord injuries.

The problem for companies looking to profit from technology using stem cells is that without patent protection there is little incentive to pour money into research.

"European patent law prohibits the patenting of human stem cell cultures whose preparation necessarily involves the destruction of human embryos," the European Patent Office said in a statement.

"That is the...