UPDATE 1-TPG is among suitors eyeing lender Paragon - source

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LONDON, July 23 (Reuters) - U.S. private equity firm TPG is among a group of suitors circling UK lender Paragon (PARA.L), just weeks after it pulled out of a deal to take a key stake in rival Bradford & Bingley BB.L, a source close to the matter said.

Paragon shares jumped more than 30 percent on Tuesday after Britain's third-largest buy-to-let lender said it was in talks with potential buyers. It gave no additional details.

The shares were up 0.9 percent at 54 pence by 0727 GMT on Wednesday, valuing the group at 345 million pounds ($692 million).

"TPG is keeping a watching brief on Paragon as it does with any number of companies," the source said, adding the interest was still preliminary and the private equity group had not asked for an information memorandum -- vital to any firm interest. "TPG is keeping an eye on it, but that's all at this stage."

TPG has come under fire in Britain after its 11th hour decision earlier this month to pull out of a planned rescue of lender B&B, after the bank suffered a ratings downgrade.

Battered B&B, which like Paragon specialises in loans for landlords, was left to restructure an emergency cash call for an embarassing third time.

TPG declined to comment on Wednesday.

News of interest in Paragon, whose shares have lost more than 80 percent of their value since the start of August last year, has revived hope that some investors may see value in Britain's beleaguered specialist mortgage sector.

The approaches are expected to have come largely from buyout firms, with rival lenders deterred by Paragon's buy-to-let focus. Another source close to the situation said on Tuesday that buyout specialist Blackstone was also among the suitors. (Reporting by Clara Ferreira-Marques; Editing by Louise Ireland)