UPDATE 3-Alcatel shares surge on Chinese bid talk, upgrade

* Shares up 16 pct in Paris, 11 pct in New York

* Traders cite Chinese company interest

* Alcatel could get $11-$12 bln based on deal averages

* Natixis raises Alcatel-Lucent to 'buy' (Adds EBITDA multiples, potential deal value, updates shares)

By Leila Abboud and Anupreeta Das

PARIS/NEW YORK, Aug 26 (Reuters) - Shares of Alcatel-Lucent SA (ALUA.PA) jumped 16 percent on Wednesday on market chatter that it could be bought by a rival Chinese manufacturer of telecommunications gear, and a rating upgrade by Natixis.

Chinese companies ZTE Corp (0763.HK) and Huawei Technologies [HWT.UL] have been expanding their operations aggressively in overseas markets, but analysts said it is not clear if either has plans for acquisitions.

Any deal for Alcatel-Lucent would mark a major acquisition. Formed in 2006 by the merger of French telecoms equipment company Alcatel with U.S.-based Lucent Technologies, the company has a market value of about 6.3 billion euros ($8.9 billion).

Globally, the average deal premium for telecoms companies so far this year has been 29.5 percent -- lower than the 34 percent average premium that companies in the technology, media and telecoms space have fetched collectively, according to Thomson Reuters data.

Telecoms companies are also selling at lower average EBITDA multiples than the number for all industries. This year, telecoms companies have been valued at 7.8 times annual earnings before interest, taxes, depreciation and amortization.

Based on those trends, Alcatel-Lucent could fetch between 8 billion euros and 9 billion euros ($11.3 billion-$12.6 billion) if sold.

Alcatel shares closed at 2.7570 euros on Euronext. They were trading at $3.86 on the New York Stock Exchange.

An Alcatel-Lucent spokeswoman declined to comment.

BUYER BEWARE?

Alcatel-Lucent has been struggling to turn a profit since its 2006 merger, which was supposed to help it cut costs and better compete with the new generation of Chinese gear makers including Huawei and ZTE.

"Chinese firms including ZTE are very strong competitors, and have their own substantial R&D operations," said Ren Wenjie, a telecoms analyst with First Capital in Shenzhen.

"They probably wouldn't be looking at buying the whole of Alcatel-Lucent, but rather at specific business units that would fit into their long-term strategy," Wenjie added.

Spokespeople for ZTE (0763.HK) and Huawei [HWT.UL] said they had not heard of any bid for Alcatel-Lucent.

Chatter about a possible deal came on the same day that Alcatel-Lucent signed a contract with China Telecom Corp Ltd (0728.HK) to provide and maintain networks in 10 Chinese provinces. The contract is part of the $700 million agreement recently signed by the two companies.

Some analysts said a Chinese bid for Alcatel-Lucent could run into regulatory problems because it runs Bell Labs, a government and military contractor in the United States.

"I don't believe that such a deal would really be possible," said Eric Beaudet, an analyst at Natixis.

Beaudet upgraded Alcatel-Lucent to "buy" from "reduce" and increased its price target to 3 euros per share from 1.80 euros, citing improvements in its CDMA wireless business and the sense that the integration of Lucent was nearly complete. (Reporting by Leila Abboud, Kirby Chien and Dominic Lau, with additional reporting by Anupreeta Das in New York; Editing by James Regan/Will Waterman, Gerald E. McCormick and Robert MacMillan)