UPDATE 1-Australian CSR aims to spin off sugar arm by March

* CSR plans to list separate sugar, renewable company

* UBS values sugar business at A$1.2 billion

* CSR aims to complete spin-off by March 2010 (Adds CSR comments)

MELBOURNE, June 17 (Reuters) - Australian building products and sugar conglomerate CSR Ltd (CSR.AX) plans to spin off its around $955 million sugar business, Australia's biggest, into a separate listed company to boost value to shareholders, in a long-forecast move.

CSR said on Wednesday the sugar company would include a renewable energy business, while the remaining company would hold its building products, aluminium and property businesses.

CSR had flagged in November that splitting its businesses made sense but the market meltdown at the time stopped it from going ahead. The decision comes after years of speculation that it would make the move.

"Improving market conditions, combined with the stronger performance and outlook for the sugar business, mean it is now an appropriate time to move forward with this proposal," Managing Dirctor Jerry Maycock said in a statement.

Investment bank UBS values CSR at A$2.5 billion ($2 billion), based on the sum of its parts, valuing the sugar business at A$1.2 billion or A$0.96 a share.

Any final decision would depend on market conditions, regulatory and shareholder approvals.

Chairman Ian Blackburne said by splitting the sugar and building products businesses the market would be able to value the two fundamentally different businesses more accurately.

CSR shares closed on Tuesday at A$1.50, valuing the whole group at A$1.9 billion. Its shares have jumped 28 percent over the past three months, outpacing a 22 percent gain in the broader market. ($1=1.256 Australian Dollar) (Reporting by Sonali Paul)