UPDATE 1-Hermes wants LVMH to halve its stake - paper
* Says move would restore stock market float
* Dismisses LVMH CEO Arnault's conciliatory tone
* LVMH spox declines comment
* Hermes shares down 0.9 percent, LVMH up 0.1 percent
(Adds LVMH 'no comment', investor reaction)
By Christian Plumb and Blaise Robinson
PARIS, May 30 (Reuters) - The chairman of French luxury group Hermes (HRMS.PA) wants bigger rival LVMH (LVMH.PA), the champagne-to-leather goods group controlled by Bernard Arnault, to halve its 21 percent stake, Le Figaro newspaper reported.
"What bothers us is the way they did it," Bernard Puech said in an interview, referring to LVMH's move last year to build up its stake. "So we ask them to sell half of their stake to re-establish our stock market float."
LVMH, the world's biggest luxury group, revealed in December it had built up its stake in Hermes to above 20 percent.
After LVMH's stake-building, 7 percent of Hermes shares remain in free float, according to the its 2010 annual report.
To defend itself from what it considered a hostile move by LVMH, Hermes's controlling family set up a holding company controlling more than 50 percent of the maker of silk scarves, watches and high-end handbags.
LVMH spokesman Olivier Labesse would not comment on the interview, published ahead of Hermes's annual shareholder meeting on Monday.
Hermes shares were down 0.9 percent by 0925 GMT, while LVMH was up 0.1 percent.
"In sports, this is called trash talk," said Pierre-Alexis Dumont, equity portfolio manager at Paris-based OFI Asset Management. "We should not be reading too much into it. Hermes is grinding its weapons before the AGM."
Puech, also head of family management company Emile Hermes, dismissed efforts by LVMH chief executive Bernard Arnault to strike a conciliatory tone.
"After six months, we are the target of incessant attacks of the kind we have never seen in 174 years, even though LVMH says its approach to us is friendly," he said. "With friends like these, who needs enemies?" (Reporting by Christian Plumb; Editing by Muralikumar Anantharaman and Dan Lalor)
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