(Reuters) -Tapestry said on Thursday it was terminating its $8.5 billion bid for Michael Kors owner Capri after a legal hurdle last month, ending their effort to create a U.S. luxury giant to compete with major European players.

Shares of Coach and Kate Spade parent Tapestry jumped Thursday morning while those of Michael Kors and Versace owner Capri Holdings fell after they called off their planned merger over ongoing legal challenges.

Fashion companies Capri Holdings Limited and Tapestry -- parent companies behind the Coach and Michael Kors brands -- ended their $8.5 billion merger deal Thursday. The deal was blocked by the Federal Trade Commission.