UPDATE 1-Spyker Cars shares surge on China distribution deal

AMSTERDAM Dec 20 (Reuters) - Shares in Spyker Cars (SPYKR.AS), the loss-making Dutch sports car maker that bought much larger Saab this year, surged as much as a third on Monday on confirmation of a distribution deal in China.

Victor Muller, Spyker's chief executive, told Reuters in an interview on Friday the firm was keen to push sales of Saab in the fast-growing, populous BRIC economies of Brazil, Russia, India and China, where car ownership is increasing rapidly as incomes rise and that it would announce a China partner soon.

On Monday, Saab announced a distribution deal with Beijing-based China Automobile Trading Co. Ltd (CATC), which operates in the Chinese automotive sector, for its cars and parts to be imported into the Chinese market.

"By signing a memorandum of understanding (MOU) with CATC, Saab re-establishes a firm footing for the brand in the largest car market in the world," it said in a statement.

Saab sees its European rivals Audi (VOWG.DE), BMW (BMWG.DE) and Mercedes Benz (DAIGn.DE) as its main competition in the crucial emerging markets of China, India, Brazil and Russia.

Muller told Reuters Spyker expects shortly to appoint local distribution partners for Russia and Brazil as well.

The market valuation of Spyker rocketed from 55 million euros at Friday's close to as much as 73 million euros on the news.

The rally took this year's rise in the share price to as much as 88 percent, beating the small-caps index .ASCX, which is up 8 percent.

The stock, which closed at 3.185 euros on Friday, rose more than 5 percent in the morning, and jumped as high as 4.25 euros, up 33 percent.

"It is good news for Spyker being able in time to sell cars in the other regions," says Tom Muller, senior analyst at Theodoor Gilissen.

"The stock has speculative appeal and more so if some partnering deals are being closed."

But Gilissen's Muller said over the next year to 18 months, Spyker needed a strategic partner to take an equity stake, bringing funding and technical knowhow.

"They need a friendly strategic partner because with more sales, they need more working capital."

OTHER BRIC MARKETS

Spyker will probably announce the appointment of local partners to distribute Saab models in the Russian markets in January, while a local distribution partner for Brazil is likely to be announced in the first quarter, Spyker Chief Executive Muller told Reuters.

In China, "first we want to set up distribution on the basis of a dealer importing cars, and then when we have got to 10,000 units, have your own manufacturing," the chief executive told Reuters in a telephone interview.

"The car to sell in China is the 9-3, and that goes into production in 2012, so the earliest we could do it anyway is 2013," he added.

Spyker reported a third-quarter operating loss in October and cut its 2010 Saab sales target to 30,000-35,000 units, from 45,000 previously, because it had to rebuild Saab's supplier base after General Motors sold the company to Spyker.

The chief executive declined to comment on whether sales for 2010 could eventually end up beating that target.

But he said sales in Sweden in November had been the best since December 2008, adding "there's been a massive return to the Saab brand; month by month it's going up and up, and we see more or less the same in other countries. Only the U.S. is the odd one out."

He reiterated that the group was sticking to its 2011 target of 80,000 cars and a 2012 goal of 120,000 units. (Editing by David Cowell)