UPDATE 1-CIC to invest $500 mln in Blackstone fund - source
* CIC plans to invest in a few hedge funds - WSJ
* CIC wants to tap opportunities near market bottom - WSJ
* Blackstone shares up 3.5 percent (Recasts with sourcing, adds share price, details on hedge fund)
NEW YORK, June 19 (Reuters) - Chinese sovereign wealth fund China Investment Corp is poised to invest around $500 million into a Blackstone Group (BX.N) hedge fund unit, a source familiar with the situation said on Friday.
The Wall Street Journal earlier reported the news and said it was part of a broad effort to put cash to work, and that the hefty injection would be welcome news for hedge funds.
The paper, citing unnamed sources, said that CIC Chairman Lou Jiwei worries about missing investment opportunities as the market nears a bottom.
Shares in Blackstone rose 3.5 percent to $11.54.
CIC has been approached by hedge fund managers, including Eton Park Capital Management's Eric Mindich and Paulson & Co's John Paulson, the paper reported.
The paper said that last year Renaissance Technologies head James Simons talked with CIC about selling a stake but did not do a deal.
The paper said it was not clear how much CIC might allocate to hedge funds, although it said officials in the past have said it plans to give asset managers up to $80 billion overall.
CIC, Blackstone and the hedge funds declined to comment to the Journal.
Blackstone's funds-of-hedge-funds unit is based in New York and London and is run by J. Tomilson Hill.
CIC was created in 2007 to manage part of China's foreign exchange reserves for higher returns. The fund has not published any official financial statements.
The fund became wary of overseas expansion after money-losing investments in Morgan Stanley (MS.N) and Blackstone, but it has recently shown renewed interest in overseas markets as the global financial crisis eases.
On Thursday, sources told Reuters that Blackstone is in talks with the Shanghai city government to set up a wholly-owned China subsidiary as it prepares to launch a local currency private equity fund. [ID:nHKG59724] (For more M&A news and our DealZone blog, go to www.reuters.com/deals) (Reporting by Paritosh Bansal and Megan Davies; Editing by John Wallace and Brian Moss)