UPDATE 2-Orascom Telecom to stop France Telecom court case

* To discontinue legal proceedings over Mobinil dispute

* Describes move as "amicable gesture"

* France Telecom says OT statement "potentially misleading"

(Adds France Telecom reation)

CAIRO, July 5 (Reuters) - Egypt's Orascom Telecom (OT) (ORTE.CA) said on Sunday it would discontinue legal proceedings in an Egyptian court against France Telecom (FTE.PA) in a dispute over shared ownership of mobile operator Mobinil (EMOB.CA).

The move, described in a statement by OT as an "amicable gesture" to focus attention on running Mobinil, is the latest in an acrimonious battle over Mobinil that has involved court arbitration and interventions by Egypt's market regulator, the Capital Markets Authority (CMA). [ID:nLV360396]

OT in May filed an appeal requesting that a sale of shares in Mobinil be rescinded because France Telecom had not met conditions for the deal.

In its statement, OT said the legal proceedings "are no longer necessary in light of recent public pronouncements by FT, which make it clear... FT has no intention of extending a public tender offer on the same terms as those contained in the Award."

FT was therefore, "not in a position to conclude the sale as mandated by the ruling of the CMA."

"OT has reserved all its rights, including its claim for damages, but hopes that further litigation can be avoided."

In an emailed statement in French, France Telecom described OT's statement as "without foundation and potentially misleading."

"France Telecom has formally brought to the attention of Orascom Telecom that the procedure it launched is susceptible to make (Orascom) lose its rights in the Mobinil structure," the statement said.

It added: "France Telecom remains determined to make its rights respected and hopes for an end to media agitation that could create trouble in the markets and among collaborators of the company: the priority is continued development of Mobinil to the service of its clients."

Shares in Mobinil last traded 0.2 percent lower at 207 pounds ($37.06) per share on Sunday. ($1 = 5.5856 Egyptian pounds) (Additional reporting by Tamora Vidaillet) (Writing by Aziz El-Kaissouni: Editing by Valerie Lee)