UPDATE 1-Barclays stops Cadbury coverage due to Kraft role

* Barclays suspends rating due to work with Kraft on bid

* Kraft says no change in relationship with Barclays (Recasts with Kraft comment, adds CHICAGO to dateline)

CHICAGO/LONDON Dec 17 (Reuters) - Investment bank Barclays Capital has suspended coverage of British chocolatier Cadbury Plc CBRY.L due to its work with Kraft Foods Inc (KFT.N) on a hostile bid for Cadbury.

"Barclays Capital is acting as financial advisor to Kraft Foods in connection with a potential takeover offer for Cadbury Plc," credit analysts at BarCap, a unit of Barclays Plc (BARC.L), said in a note to clients. "The rating on Cadbury has been temporarily suspended due to Barclays Capital's role in this potential transaction."

Kraft said on Nov. 9 that Barclays was one of the banks participating in a $9.2 billion senior unsecured term loan.

A Kraft spokesman said on Thursday that since then, there has been no change in its relationship with Barclays regarding Kraft's hostile bid for Cadbury, which is now valued at $16.13 billion (9.98 billion pounds).

"There has been no expansion in Barclays role," Kraft spokesman Michael Mitchell said. "As previously disclosed, they are a financing source as part of the transaction."

Barclays declined to comment.

BarCap, the investment banking unit of Barclays, is aiming to become a top global full-service investment bank, broadening from a traditional debt focus after it took over Lehman Brothers' U.S. operations.

A credit as financial adviser on Kraft-Cadbury would yield valuable kudos in mergers and acquisitions (M&A) league tables. (Reporting by Quentin Webb in London and Brad Dorfman in Chicago; Additional reporting by Jessica Hall in Philadelphia; Editing by David Holmes, Matthew Lewis and Richard Chang)