UPDATE 2-Bell Canada says will offer retirement incentive

(Adds number of staff, savings from previously announced plan, stock price)

OTTAWA Jan 20 (Reuters) - Bell Canada, the core phone division of telecommunications company BCE Inc (BCE.TO), said on Tuesday it will offer a retirement incentive to about 1,500 unionized staff as it moves to cut costs.

BCE, which was set to be bought out in a C$34.8 billion ($27.6 billion) private equity deal until the transaction collapsed in December, said the offer will be open to members of the Communications, Energy and Paperworkers' Union.

The Montreal-based company did not disclose the financial terms of the offer, saying only that it applied to staff meeting "certain criteria", who were already eligible to retire in 2009 and 2010.

BCE, which employs more than 50,000 people, with more than 41,000 at Bell, said the incentive plan was not an early retirement program and that it would stagger retirement dates so that there is no impact on service.

"This initiative supports Bell's strategic imperative to achieve a competitive cost structure," Chief Executive George Cope said in a statement.

In December the company said that a range of initiatives, including a 15 percent cut to Bell's management jobs, would result in savings of about C$400 million a year.

Shares in BCE rose 3 Canadian cents to C$25.08 on the Toronto Stock Exchange and 4 cents to at $19.91 on New York by midday on Tuesday.

($1=$1.26 Canadian) (Reporting by Susan Taylor; editing by Rob Wilson)