UPDATE 2-Dubai creditors to get multiple options -sources

* Multi-tranche restructuring proposal considered

* Size of 'haircut' depends on Abu Dhabi aid

* Final deal expected to take months

(Adds banker comments)

By Matt Smith and Steven Slater

DUBAI/LONDON, March 10 (Reuters) - Lenders to Dubai World [DBWLD.UL] will get a range of options including full repayment once Abu Dhabi decides how much additional support it will give its debt-laden neighbour, sources close to the discussions said.

Bankers in London and the Gulf are divided over how Dubai should restructure the $26 billion debt pile dogging its flagship holding company, leading the emirate to consider parallel offers in an effort to please all, the sources said.

How this "framework of a proposal" shapes up depends largely on how much additional capital the United Arab Emirate's (UAE) main oil exporter Abu Dhabi is willing to provide its neighbour Dubai, given that Dubai itself has little means of raising cash.

"Support from Abu Dhabi is the missing piece," said one senior London banker active in the emerging markets. "There has to be a political angle to the possible solution as Dubai World doesn't have enough to repay the debt out of its own resources."

State-owned conglomerate Dubai World held informal talks with major creditors, which include HSBC (HSBA.L) and Standard Chartered (STAN.L), in London this week as it finalises a deal.

There is widespread expectation among creditors that Abu Dhabi will ride to the rescue, as it did in December when it helped Dubai avert an embarrassing default on an Islamic bond linked to property developer Nakheel.

A proposal, which is expected in the coming days or weeks, may include more than two tranches in an effort to meet the needs of the 97 lenders to Dubai World.

Local banks with little lending power may want whatever they can get from Dubai World quickly, while international lenders with big balance sheets can afford to wait for full repayment.

Two of the restructuring options include repayment over three to five years with the principal discounted, and repayment over seven to nine years with no discount. How much of a "haircut" is included on the shorter-term deal depends on how much money Abu Dhabi stumps up.

No real decision on the exact shape of the deal has taken place yet, said one London source.

But once it does, it will only be the opening shot in a long war of words with the final settlement likely months away.

"If they put a proposal out in March, its very doubtful that it will clear 95 lenders' credit committees by the end of the standstill in April," said the emerging markets London banker.

"Different voices and different reactions need to be pulled into a common response by the steering committee."

Creditors are likely to resist any initial proposal with demands for better terms, including some sort of board representation or management control over the borrowers.

"Creditors are in a twilight zone between being a creditor and an equity holder and are looking for enhanced creditor rights. Negotiations will zero in on that particular dynamic," said the banker.

DUBAI UTILITY IN BOND PLAN

Abu Dhabi is the capital of the seven-member UAE federation -- the world's third-largest oil exporter -- and by far the richest. But it has kept noticeably mum about its plans for Dubai, hard hit by the global financial crisis and burdened by an estimated $101 billion in total debt.

Last year's $10 billion bailout is conditional on Dubai World reaching a deal with creditors. About $5 billion of those funds have yet to be released.

Dubai exports little oil, but raised its profile internationally with eye-catching construction projects such as the world's tallest building and palm-shaped islands in the sea.

The fallout from Dubai's debt crisis is being felt in Abu Dhabi, with Moody's downgrading seven government-related entities late last week as they did not have an explicit, formal guarantee of government backing.

In a sign of how much Dubai's own financial power has been curtailed, its state-owned utility Dubai Electricity and Water Authority (DEWA) said on Wednesday its planned $1.5 billion bond would carry no government guarantee.

DEWA's [DEWATF.UL] plan to issue bonds marks Dubai's first dip into international capital markets since its debt crisis last year. DEWA had postponed the issue after Dubai World shocked global markets in November, when it requested a standstill on debt linked mainly to its property developers, Limitless World and Nakheel, builder of the palm-shaped islands.

Markets entered a holding pattern ahead of any announcement, with Dubai's main stock index .DFMGI easing slightly on Wednesday after climbing 4.9 percent in the past three days.

The price of insuring against default on five-year Dubai debt fell five basis points to 483, according to CMA DataVision, while the Nakheel bond of 2011 XS0335122106=R edged $0.50 higher to $61.50, still a distressed level.

(Additional reporting by Tamara Walid and Tessa Walsh; Editing by Will Waterman and Erica Billingham)