CORRECTED - French builders to bid for 10 bln euro rail projects

(Corrects 13th paragraph to show Reunion is in the Indian Ocean not the Caribbean. Adds currency conversion.)

* Bids for two high-speed rail, stimulus projects next week

* Bouygues, Vinci, Eiffage expected to bid

* Infrastructure projects in stimulus to boost 2011 earnings

* State tries to spur private financing with loan guarantees

By Leila Abboud and Gilles Guillaume

PARIS, Dec 11 (Reuters) - French construction giants are set to bid for two major high-speed rail track contracts next week worth 10 billion euros ($14.7 billion) as the government's long-awaited economic stimulus plan gets underway in the hard-hit building sector.

Analysts expect such projects to boost earnings at Bouygues (BOUY.PA), Vinci (SGEF.PA), and Eiffage (FOUG.PA) but warned construction and financing delays could put off the expected benefits until 2011.

"There is no doubt that public works will bottom out in 2010 and that 2011 will be more prosperous," said Charles-Edouard Boissy, analyst at Oddo Securities. "Government stimulus projects can fill some of the gaps, but the problem is that they are more likely than not going to be behind schedule."

The three French companies are expected to submit bids on Tuesday for a 7 billion-euro contract to build a 340 kilometre high-speed rail line between Tours in central France and Bordeaux in near the Atlantic coast in the south.

On Wednesday, the trio are expected to submit bids for a second high-speed rail project in Brittany, worth 3 billion euro to the winner.

"Public works on this scale are like a locomotive that will pull along the rest of the sector and will allow hiring to occur," said Patrick Bernasconi, president of France's National Federation of Public Works. "But given the time it takes to get such projects underway, building will not really begin in 2010, but rather in 2011 or 2012."

The French stimulus plan announced in Dec. 2008 called for 33 billion euros of investments to protect jobs and spur economic activity. Construction and infrastructure projects, such as highways, high-speed rail and ports account for 10.8 billion of this, the largest chunk for any sector.

Some of the projects will be so-called PPP contracts, in which the company receives fixed payments during the contract and the state does not have to put up large amounts upfront.

Despite these innovative measures, concerns remain over how construction projects on such a large scale will be financed, given that state purses are strained and banks are more risk averse about lending in the aftermath of the credit crunch.

To attract private financing, the French government has set up a 10 billion euro loan guarantee available for 80 percent of private sector debt that goes to projects. It has also promised 8 billion euros in financing from the Caisse de Depots & Consignations, a state investment fund.

But a source close to the French construction companies said banks were unwilling to issue loans longer than 15 years.

Since many PPPs last 20-30 years, obtaining financing was proving challenging, said the person.

Recently a 1.55 billion-euro tram project in the French Indian ocean island of Reunion was delayed when the local government threatened to cancel if it did not receive the French state loan guarantees. [ID:nGEE5B12EF]

The construction sector share index rose 30 percent this year, more than the wider market, on expectations building companies will benefit from an economic recovery takes hold.

Shares of Vinci have climbed 30 percent to 30 euros per share. Bouygues is up 12.7 percent to 34 euros per share and smaller rival Eiffage is up 5.8 pecent to 39.54 euros per share, with both underperforming the Dow Jones Construction index.

For a FACTBOX click on [ID:nGEE5BA0IF]

(Editing by Marcel Michelson)