UPDATE 2-China govt clears Geely to buy Volvo-source

* Geely's $1.8 bln plan to buy Volvo gets China approval

* Deal could be completed as early as next week -source

* Volvo last brand left from Ford's premier auto group (Adds source confirming China approval, timing of deal, changes dateline)

DETROIT/HONG KONG, July 29 (Reuters) - China's regulator has approved Geely's acquisition of Ford's (F.N) Volvo unit, clearing one of the last remaining hurdles to the high-profile deal, a source with knowledge of the matter said on Thursday.

The deal could be completed as early as next week, said the source, who spoke on the condition of anonymity as the discussions remain private.

Shares of Geely Automobile (0175.HK) jumped 11 percent on Thursday, after Reuters and other media, citing unnamed sources, reported the company's privately held parent, Zhejiang Geely, would close the high-profile purchase as soon as next week. [ID:N28220371]

With the deal approved by the European Union earlier in July, it was left to China's Ministry of Commerce, the main government overseer of major acquisitions, to give its approval for the $1.8 billion purchase agreed to in March.

Representatives of the Ministry of Commerce reached by Reuters could not confirm if the deal had been approved. A Geely spokesman could also not be reached for comment.

The official Xinhua news agency quoted an unidentified Commerce Ministry official as saying that the deal had been approved on Monday.

The purchase of Volvo by Geely, the world's 27th largest automaker, represents the biggest acquisition of a brand from an established automaker by a Chinese company.

The addition of Volvo will also catapult Geely into a prominent position in China's burgeoning auto market, now the world's largest.

Ford, which posted a $2.6 billion second-quarter profit, has said the automaker remained on track to complete the sale of Volvo in the third quarter.

Volvo is the last brand remaining from Ford's former premier auto group. Ford previously sold the Jaguar, Land Rover and Aston Martin brands to narrow its focus. In June, Ford also announced plans to wind-down its Mercury brand.

Geely has previously discussed plans for returning Volvo to profitability. A major component of that would see Geely build a new Volvo manufacturing facility in China that would nearly double the Swedish carmaker's capacity, relying heavily on sales to the China market to achieve economies of scale.

Such a major investment would require approval from China's state planner, the National Development and Reform Commission.

To view a Special Report on the long road to Geely's Volvo acquisition, click on: [ID:nSGE66M029]; to read the report in PDF format, click on: r.reuters.com/feb98m. (Reporting by David Bailey in Detroit and Doug Young in Hong Kong; Editing by Jacqueline Wong and Gunna Dickson)