UPDATE 3-Peabody closes in on Australia's Macarthur with new bid

* Peabody raises Macarthur offer to A$16/shr cash

* New bid at 5 pct premium to Macarthur's last trade

* Bid hinges on Macarthur dropping own takeover plans

* Rival bidder New Hope says no plans to up offer for now

* Macarthur says will consider latest offer on Friday (Adds Macarthur, CITIC resources and analyst comment)

By Sonali Paul and Fayen Wong

MELBOURNE/PERTH, April 15 (Reuters) - U.S. miner Peabody Energy (BTU.N) raised its offer for Macarthur Coal MCC.AX by 14 percent to $3.8 billion, in what could be the knockout blow in a frenzied bidding war for the Australian miner.

Coal producers are chasing Macarthur because it is the world's biggest exporter of PCI, a cheaper, cleaner coal coveted by steelmakers, at a time when coking coal prices have nearly doubled on red-hot demand from Chinese and Indian steel mills.

The takeover is part of a flurry of deals targeting resources across the globe as mining and energy groups look to grab iron ore, coal, oil and gas to feed Asia's booming needs.

Earlier this week, a subsidiary of Sinopec (0386.HK) (600028.SS)(SNP.N) agreed to pay $4.65 billion for a stake (COP.N) in a Canadian oil sands project, in China's second-largest investment in North America. [ID:nN12204127]

Peabody's all-cash offer of A$16 per share trumped a sweetened cash and share offer worth A$14.50 from Macarthur's local rival New Hope Corp (NHC.AX).

Peabody's third bid was pitched 5 percent above Macarthur's last trade and 32 percent above the Australian firm's share price two weeks ago when the takeover battle began.

Sam Turner, resource analyst at RBS Morgan said the latest offer was a "game-changer" and could flush out other interested parties that have been waiting on the sidelines.

Macarthur, named after U.S. World War II General Douglas Macarthur, said it would consider Peabody's latest bid on Friday. It has spurned four offers in two weeks in favour of its own plan to take over smaller rival Gloucester Coal GCL.AX.

RBS Morgan's Turner said the A$16 a share bid was better than the Gloucester deal, so should be enough to sway Macarthur's board.

The bid hinges on Macarthur scrapping a vote on Monday on its Gloucester deal, under which Hong Kong-based commodities firm Noble Group (NOBG.SI) would take a near one-quarter stake in Macarthur.

Noble could not be immediately contacted for comment.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For NEWSMAKER on Macarthur CEO: [ID:nSGE63607A]

For FACTBOX on pulverised coal [ID:nSGE638013]

For related BREAKINGVIEWS: [ID:nLDE6371OP]

For Graphic on China coal imports:

here

For Graphic on forecast Australian coal exports:

here

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Apart from precious coal resource, the willingness of major miners to pay up for metallurgical coal deals in recent years has also been driven by the need to gain port capacity.

Analysts said Macarthur's unused port allocation of up to 3 million tonnes a year could be worth more than A$1 billion to other majors that have expandable hard coking coal assets in the Bowen Basin region in eastern Australia.

RBS values Macarthur at A$13.55 a share, assuming a PCI price of $170 a tonne over the next three years, and a long-term average price of $110 a tonne. Miners have struck 2010 contract PCI prices at $170-$180 a tonne, about double last year's level.

KEY SHAREHOLDERS

Peabody is offering Macarthur's top three shareholders -- China's CITIC Resources (1205.HK) and steel giants ArcelorMittal (ISPA.AS) and South Korea's POSCO (005490.KS) -- who together own 47.3 percent, the option of retaining their stakes.

CITIC Resources declined to comment on its position ahead of Macarthur saying whether it would go ahead with the Gloucester deal.

"This is so sensitive to the market," said Joseph Chow, investor relations manager at CITIC Resources, adding that any decision would be made by its parent, state-owned CITIC Group.

POSCO and ArcelorMittal declined to comment.

In response to Peabody's raised offer, New Hope said it has no plans to raise its rival offer for now and will await Macarthur shareholders' vote on the Gloucester deal on Monday.

A potential third bidder, coal giant Xstrata XTA.L, had approached one of the top three shareholders, Macarthur has said, triggering speculation it might bid.

But at what some analysts see as a full price at A$16 a share, Swiss-based Xstrata is unlikely to enter the fray.

Xstrata has said it was focused on growing its own assets and would only look at "opportunistic" takeovers. (Editing by Muralikumar Anantharaman)