China orders state groups to explore Potash bid: source

HONG KONG (Reuters) - Chinese officials have ordered state-owned companies to meet with investment bankers to explore potential options to block BHP Billiton's $39 billion bid for Potash Corp, according to a source with direct knowledge of the matter.

In response to the directive, Sinochem is holding meetings with multiple banks, the source said, including Citigroup, HSBC and Morgan Stanley.

One option being discussed is the possibility of Sinochem linking up with China's $300 billion sovereign wealth fund, CIC, according to a second banking source familiar with the matter.

The order from Beijing underscores the seriousness in which China is taking the potential BHP-Potash tie up and its implications to its fertilizer pricing and supply, despite the obstacles of launching a successful counter-bid.

Sinochem declined to comment. CIC could not immediately be reached. The banks declined to comment. The sources were not authorized to speak publicly about the directive and the talks, due to the sensitive nature of the discussions.

(Reporting by Joseph Chaney and Michael Flaherty)