UPDATE 1-Renault-Dongfeng deal expected this month -source

Mon Jul 8, 2013 6:26am EDT

* Total investment close to 10 bln yuan - source

* Renault shares rise 3.7 pct (Adds source comment, background, share price)

By Gilles Guillaume and Fang Yan

PARIS/BEIJING, July 8 (Reuters) - French carmaker Renault and Dongfeng Motor Group hope to sign an agreement later this month to create their planned Chinese joint venture, a source close to the carmakers said on Monday.

The venture will involve a total investment of close to 10 billion yuan ($1.6 billion), according to the source, who asked not to be identified because discussions with Chinese authorities were confidential.

"We are waiting for an official invitation from the Chinese industry ministry," the source said.

Renault shares rose as much as 3.7 percent earlier on Monday after China Business News reported that the carmakers expected to finalize their planned joint venture in July. The stock was up 3.6 percent at 56.90 euros at 1008 GMT.

A spokeswoman for the French carmaker declined to comment on the report but reiterated that Renault was hoping to receive final approval from Chinese authorities this year for the venture with Dongfeng.

Renault announced the partnership last year along with plans to manufacture its own cars in China. Japanese affiliate Nissan Motor Co already assembles vehicles in its own joint venture with Dongfeng.

According to China Business News, the Renault-Dongfeng operation would have annual production capacity of 150,000 vehicles and begin producing SUVs and minivans in 2014.

All foreign carmakers producing vehicles in China must operate through a joint venture with a local firm. Renault briefly produced cars in China in the mid-1990s in a tie-up with a little-known state-owned maker of special purpose vehicles.

Dongfeng, China's second-largest automaker, also has car ventures with Honda Motor Co and PSA Peugeot Citroen . ($1 = 0.7792 euros) (Additional reporting by Laurence Frost in Paris; Editing by James Regan and Marc Joanny)

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