UPDATE 1-China First Hvy Shangai IPO to raise up to $1.7 bln

* China First Heavy sets IPO price range at 5-5.8 yuan

* Set to raise as much as $1.7 billion in Shanghai IPO

* Price range set after poor debut by XD Electric (Adds details, background)

SHANGHAI, Jan 28 (Reuters) - China First Heavy Industries (601106.SS) has set the price range for its Shanghai initial public offering (IPO) at 5 to 5.80 yuan, which could raise 11.6 billion yuan ($1.7 billion) in China's biggest IPO this year.

First Heavy, the country's second-largest maker of heavy machinery, will issue up to 2 billion yuan-denominated A shares, or 30.59 percent of its expanded capital, the company said in a statement to the Shanghai Stock Exchange on Thursday.

The pricing gives First Heavy, which makes equipment for steel mills, power producers and refiners such as Baosteel Group (600019.SS) and Sinopec (0386.HK), a maximum price earnings ratio of 42 times its 2008 net profit on a fully diluted basis.

First Heavy's underwriter, BOC International, said earlier in the week the IPO could raise up to 13.7 billion yuan, well above the 8.4 billion yuan the manufacturing company said it needed in its prospectus.

In a report, BOC said the shares should be priced in a 5.97 to 6.85 yuan range, or 25.3 to 29.1 times its forecast 2010 earnings per share.

A senior company executive said on Tuesday that the company planned to boost its revenue up to fivefold by the end of 2015 to 40-50 billion yuan, from about 10 billion yuan in 2008, benefiting from China's heavy investment in nuclear power.

The company, based in northeastern China's Heilongjiang province, said it would use the IPO proceeds to upgrade technology, manufacture equipment and supplement working capital.

First Heavy's price range was set after China XD Electric Co (601179.SS) on Thursday marked the mainland's worst listing debut in more than five years, sending a warning to China's securities regulator that it might have gone too far in trying to cool the stock market. [ID:nTOE60Q0AJ]

In recent months Chinese authorities have been boosting the supply of shares to the market as worries mounted over potential price bubbles. ($1=6.83 Yuan) (Reporting by Edmund Klamann and Farah Master, editing by Will Waterman)