UPDATE 1-Metso in 177 mln euro bid for Finland's Tamfelt

* Offers 3 new Metso shares for every 10 Tamfelt shares

* Deal to boost Metso services sales by 140 mln eur annually

* Deal seen closing in Q1 2010 at latest

HELSINKI, Nov 5 (Reuters) - Finnish engineering firm Metso (MEO1V.HE) launched a 177 million euro ($261 million) bid for smaller rival Tamfelt Oyj (TAF1V.HE) on Thursday, seeking to bolster its services business.

"The combination will strengthen Metso's services business especially in the pulp and paper industry," Metso said in statement.

"For Tamfelt, the combination creates new growth opportunities especially outside Europe, where Metso has an extensive installed base and wide sales and services network," it said.

Metso said it was offering Tamfelt shareholders 3 new shares for every 10 Tamfelt shares, plus 0.35 euros cash for some 400,000 outstanding stock options, valuing Tamfelt at around 177 million euros total.

Metso said the deal, which requires regulatory approval in Finland "and some other countries", should close in the first quarter of 2010 at the latest.

It said the purchase should boost services business sales by some 140 million euros annually.

Metso said Tamfelt's board has backed the bid, with 35.6 percent of shareholders having agreed to the offer. The offer will open on Nov 23 and is expected to close around Dec 18. ($1=.6782 Euro) (Reporting by Brett Young; Editing by Hans Peters)