UPDATE 1-JSW denies in talks with NWR owner over tie-up

WARSAW/LONDON/PRAGUE Feb 29 (Reuters) - Polish group JSW, the European Union's biggest coking coal producer, denied a report that it was in talks with the majority shareholder of Czech miner New World Resources about a potential tie-up.

The Daily Telegraph newspaper, citing unnamed City sources, reported JSW had held "early-stage talks" with BXR, an unlisted industrial investment group that holds almost 64 percent of NWR.

"I am really surprised, because we are not working on this, and as the CEO of the company, I would know about it," JSW chief executive Jarosaw Zagórowski said. "I deny this information."

A separate source familiar with the matter said the two sides had spoken, but said there were no tie-up plans: "In this industry, everyone speaks to everyone."

NWR, a producer of coking and thermal coal chaired by former BHP Billiton executive Mike Salamon, sells to the steel and energy sectors in the region and has no real exposure to the seaborne coal trade, meaning it has been badly hit by the weakening European economy and the impact of the debt crisis.

"The challenges that these groups have is they have deep and difficult mines, and they are only exposed to the regional market, supplying the weakest steelmaking community in the world," analyst Tim Dudley at Collins Stewart said.

"Combining with another group ... could be a matter of consolidating the cost base. I can't see too many synergies."

JSW also mainly sells its coal within the region, including Poland, Germany, Romania and Austria. Steelmaker Arcelor Mittal in Poland is its biggest client.

The newspaper quoted some sources as saying BXR would not accept a valuation of less than 800 pence per New World share.

That is well above the current price of around 530 pence, but still below the top-of-the-range price of 1,325 pence at which NWR listed in 2008.

New World's London-listed shares pared early gains to trade 2.7 percent lower at 529.5 pence at 0915 GMT, underperforming a 0.2 percent dip in the UK mining sector. JSW was down 0.3 percent.

NWR and BXR declined to comment.