UPDATE 3-Simon tells General Growth to negotiate now

* Simon says offer not open-ended

* Hearing date postponed to March 3

* General Growth shares up 7.5 pct, Simon shares up 1.4 pct

(Adds Simon CEO quotes, stock price)

By Paritosh Bansal and Ilaina Jonas

NEW YORK, Feb 17 (Reuters) - Simon Property Group Inc (SPG.N) stepped up pressure on General Growth Properties Inc GGWPQ.PK on Wednesday, threatening to walk away from its $10 billion bid if its bankrupt rival did not begin talks soon.

Simon Property Chief Executive David Simon accused General Growth of "inappropriately speculating with creditors' money" and urged the bankrupt company begin serious talks now, launching the latest salvo in a battle that has rapidly escalated after months of behind-the-scenes maneuvering.

"I want to reiterate that our offer is not open-ended, and we have a number of other opportunities under consideration. We sincerely hope you will engage seriously with us without further delay," David Simon wrote in a letter addressed to General Growth CEO Adam Metz.

General Growth was not immediately available for comment.

The new communication came a day after Simon Property went public with its offer to buy General Growth for about $10 billion, which included $7 billion to fully repay General Growth unsecured creditors, and the rest for stock holders.

Simon Property said it decided to make its offer public after General Growth rebuffed its offer to enter into serious negotiations.

Simon also made the offer a week before Chicago-based General Growth was scheduled to ask a bankruptcy court judge for a six-month extension of the period in which it has the exclusive right to come up with a plan to emerge from bankruptcy.

The hearing has been postponed to March 3 from Feb. 22.

Late Tuesday, General Growth responded to Simon in a letter saying it was exploring all potential alternatives to emerge from bankruptcy, including a sale and raising equity from institutional investors in order to remain a free-standing company.

In its letter Tuesday to Simon, General Growth, the second-largest U.S. mall owner, said it plans to send out detailed information about the company and its properties to interested parties by the beginning of March.

"While you pay lip service to time being of the essence, the 'process' outlined in your letter will take many months before a transaction could be agreed and made available to stakeholders," Simon wrote.

Many analyst and observers said the offer from Simon, the largest U.S. mall owner, would set off a bidding war for the Chicago-based company whose more than 200 malls include Fashion Show in Las Vegas and the Ala Moana Center in Honolulu.

Brookfield Asset Management, which has been buying up General Growth unsecured debt, also has expressed an interest in General Growth.

"We are unwilling to waste our time and resources in a process not conducted on a level playing field, that is dragged out to provide an unfair advantage to any party, or that will serve any agenda other than maximizing return for General Growth's stakeholders," Simon wrote.

General Growth filed for bankruptcy protection in April after the credit crisis made it impossible for the company to refinance its expiring property and corporate debt.

"Given the clear risks of pursuing an alternative plan, the current state of the retail industry and your company's past history of risky financial choices, your lack of urgency should deeply concern creditors and shareholders," David Simon wrote.

Simon said its offer is fully financed and that it was prepared to negotiate and enter into a definitive agreement within 30 days.

Shares of General Growth, which soared 25 percent on Tuesday, closed up an additional 7.5 percent Wednesday at $12.92. Simon shares closed up 1.4 percent, or $1.03, at $75.85 on the New York Stock Exchange and were unchanged in after-hours trade.

(Reporting by Ilaina Jonas and Paritosh Bansal; Editing by Phil Berlowitz)