CORRECTED - CORRECTED-UPDATE 5-Japan's Suntory considering merger with Kirin

(Corrects paragraph 10 to show the percentage refers to Kirin and Suntory's share in Japan's market, not global market)

* Deal would create food/drinks giant with $41 bln sales

* Merged entity would control half of Japan's beer market

* Merger could hit regulatory approval snags -analyst

* Could trigger consolidation in Japan, acquisitions abroad

* Kirin up 7.8 pct, other brewers also rise (Updates share price, adds background)

By Mayumi Negishi and Nathan Layne

TOKYO, July 13 (Reuters) - Japanese brewer Suntory Holdings Ltd said on Monday it was considering a merger with larger rival Kirin Holdings Co (2503.T) in a deal that would create one of the world's largest beverage and food firms.

The news sent shares of Kirin soaring 7.8 percent to a nine-month high and lifted shares of other brewers amid speculation that a deal would trigger consolidation in the sector.

A merger would put Kirin and unlisted Suntory on par in revenue terms with U.S.-based Kraft Foods (KFT.N) and Pepsico Inc (PEP.N), and give the two more pricing power in Japan's mature market.

"If a merger is realised, that would give them the market share to take leadership in pricing and help their soft drinks businesses -- a chronic weak spot in an ultra-competitive market," in Japan, said JP Morgan analyst Naomi Takagi.

"It's a huge positive if they can do it."

Suntory spokeswoman Naoko Tsuda said that the company was considering various options including a merger with Kirin but that nothing had been decided.

Kirin spokesman Mitsutake Matano declined comment on the possibility of a merger, repeating a statement that Kirin is working with Suntory on procurement, distribution and other business activities.

Kirin and Suntory are in talks to merge under a holding company, and aim to agree on the deal this year, the Nikkei business daily said, citing unidentified sources.

The merged firm would be the largest player in the Japanese beer and soft drink markets with combined annual sales of 3.8 trillion yen ($41 billion), giving them more resources to seek acquisitions abroad.