UPDATE 1-China real estate portal SouFun preparing IPO -sources

* IPO could be worth up to $300 million - source

* Float likely to take place on NYSE - source

* JPMorgan, Merrill, UBS vying for mandates - sources

* Shares of rival CRIC down 21 percent since Oct 2009 IPO (Adds details)

By Kennix Chim and Doug Young

HONG KONG, July 23 (Reuters) - SouFun, China's No. 2 online real estate website, is preparing for a U.S. initial public offering worth up to $300 million, in what could be the largest such listing by a Chinese Web company this year, sources said.

JPMorgan Chase & Co (JPM.N), Bank of America Merrill Lynch (BAC.N) and UBS AG (UBSN.VX)(UBS.N) were working on the deal, although no final mandates had been given, sources at the three banks said on condition of anonymity because nothing had been finalised.

Media reports have said Goldman Sachs Group Inc (GS.N) and Deutsche Bank AG (DBKGn.DE) may also be vying for mandates.

SouFun, 51 percent owned by Australia's Telstra Corp (TLS.AX), aimed to list on the New York Stock Exchange and could make its offering by year end, said one of the sources working on the deal.

A Telstra spokesman had no comment on the matter.

Telstra purchased its 51 percent stake in Soufun in 2006 for $254 million, giving the company a valuation of around $500 million at that time.

At the time of its purchase, Telstra said SouFun Chief Executive and founder Vincent Mo would remain a significant shareholder, while remaining shares would be held by management and venture capital firm IDG.

Since then, the company has increased in value and is worth around $1 billion, although several sources said the banks and Mo were still haggling over a final valuation for the company, which has been rumoured to be seeking an IPO for several years now.

Based on an approximate valuation of about $1 billion and a usual float of 25 percent of a company for such listings, the SouFun listing could be worth between $100 million and $300 million, said a banker working on the deal.

SouFun covers 104 Chinese cities and has 20 million registered users, according to media reports.

It competes with market leader China Real Estate Information Corp (CRIC.O), which raised $216 million in a Nasdaq IPO last October. Since then, CRIC's shares have dropped 21 percent from their $12 IPO price and now trade at a P/E multiple of 17.7 times.

China's top three online real estate portals posted combined online advertising revenue of 210 million yuan ($31 million) for the fourth quarter of 2009, up from 110 million yuan in the first quarter, according to iResearch.

The offering would also come as another major Chinese Internet company, Dangdang.com, an online retailer known as the Chinese equivalent of Amazon.com Inc (AMZN.O), pursues its own U.S. listing after years of false starts.

Sources told Reuters in May that Dangdang had hired Credit Suisse Group AG (CSGN.VX) and Morgan Stanley (MS.N) to underwrite a long-delayed IPO that could happen by year end. [ID:nTOE64G06U] (Additional reporting by Sonali Paul and Mike Smith in Sydney; Editing by Chris Lewis)