UPDATE 1-UK's LSE not eyeing Indian exchange stake - source

LONDON/MUMBAI, March 30 (Reuters) - The London Stock Exchange (LSE.L) is not in talks to buy a stake in India's new stock exchange, MCX-SX, a source familiar with the matter said on Monday.

India's Business Standard had said the British market operator was in discussions with Financial Technologies (FT) to buy a 5 percent stake in the exchange.

"LSE is not looking for a stake in MCX-SX," the source said.

Spokesmen for LSE and FT declined to comment.

The Financial Technologies (FITE.BO) group is in talks to sell a stake in MCX-SX as it must bring down its holding to below 51 percent within one year of operations under Indian regulations.

FT now owns 49 percent of MCX-SX, which currently offers currency derivatives trading and is awaiting regulatory approval to begin equity trading.

Group firm Multi Commodity Exchange, in which FT has a 32 percent stake, holds the remaining 51 percent of MCX-SX.

MCX-SX plans to launch a segment for small- and medium-sized companies on its stock exchange and the LSE's experience in developing its junior Alternative Investment Market (AIM) could be of help.

But even on a business co-operation level discussions regarding introducing London's AIM model are at a preliminary stage, the source said.

Exchanges in mature markets are eager to make forays into emerging markets.

The NYSE Euronext (NYX.N) (NYX.PA), for example, holds 5 percent in India's National Stock Exchange while Deutsche Boerse (DB1Gn.DE) and Singapore Exchange Securities Trading (SGXL.SI) hold five percent each in the Bombay Stock Exchange.

But the LSE has been cautious in making such moves. (Reporting by Janaki Krishnan and Daisy Ku; Editing by Greg Mahlich)