UPDATE 4-RiskMetrics backs CF in Agrium takeover dispute

* RiskMetrics says CF holders should not withhold votes

* RiskMetrics cites uncertainty and price of Agrium bid

* CF up 0.1 percent; Agrium up 1.9 percent (Adds Agrium statement, closing share prices)

By Michael Erman

NEW YORK, April 13 (Reuters) - Top proxy advisory firm RiskMetrics recommended that shareholders of CF Industries Inc (CF.N) support the fertilizer maker's three candidates for its board, instead of withholding their votes as urged by hostile suitor Agrium Inc (AGU.TO).

CF has turned down an unsolicited $3.8 billion takeover offer from rival Agrium and is locked in its own proxy fight with takeover target Terra Industries TRA.N.

Agrium has said withholding votes in the election would "send a clear message to the CF board to engage with Agrium."

But RiskMetrics, in a report dated April 12, said Agrium's bid was not high enough and was too uncertain to justify withholding votes from the CF board candidates.

"Agrium has played a version of the old 'four corners' basketball offense, stalling for time rather than pressing the ball up the court and driving to the basket for the win," RiskMetrics said.

"Although Agrium has fairly reasonable explanations for each move it has made, looking at the steps on a collective basis, along with the timing of the bid itself, may cause CF shareholders to conclude that the Agrium bid is something less than 'certain.'"

CF has said the Agrium offer is an attempt to interfere with its hostile takeover bid for Terra, which the company launched in January. CF has nominated a slate of three directors for election to Terra's board.

Agrium made its unsolicited offer for CF in February, but missed the deadline to nominate its own slate of directors. It started the withhold campaign instead.

"We strongly disagree with RiskMetrics' voting recommendation," Agrium said in the statement. "Agrium remains fully committed to acquiring CF. We are offering a substantial premium and have clearly stated our willingness to raise our offer further if CF can demonstrate additional value."

Agrium increased the size of its cash-and-stock offer already to $75 a share in late March, up from its previous bid of $72 a share. But some analysts and investors have said the sweetened bid may not have been high enough to entice investors to withhold.

"Agrium didn't do themselves a big favor by just bumping the overall bid by just 4 percent," said Stephen Velgot, special situations analyst at Susquehanna. "Agrium's board may have felt that shareholders would at least withhold their vote in order to send a message to the CF board that they should negotiate."

CF's annual shareholder meeting is scheduled for April 21.

Shares of CF closed down 6 cents at $72.97 on the New York Stock Exchange on Monday, while Agrium rose C$1.04, or 2.2 percent, to C$48.24 on the Toronto Stock Exchange. (Additional reporting by Matt Daily in New York and Euan Rocha in Toronto; Editing by John Wallace, Lisa Von Ahn and Leslie Gevirtz)