UPDATE 1-Daiichi Sankyo begins late-stage trials of flu drug

* Seeks to apply for approval by March 2010

* Shares down 2.8 percent vs 1.1 pct decline for Nikkei

TOKYO, Nov 5 (Reuters) - Daiichi Sankyo (4568.T), Japan's third-largest drugmaker, said on Thursday it has begun a late-stage trial in Japan for the influenza treatment laninamivir, a drug that aims to prevent new H1N1 flu as well as bird flu infections.

Daiichi Sankyo plans to apply for approval of the drug, which is also known as CS-8958 and which is taken by inhalation, by March 2010. It aims to bring it to market by March 2011.

Australian drugmaker Biota (BTA.AX) owns the U.S. and UK rights to develop and market the drug.

Japan's Shionogi (4507.T) said this week it has applied for approval of the experimental influenza treatment peramivir, an intravenous drug, in Japan. [ID:nTFA006488]

It bought the Japan and Taiwan rights to peramivir from U.S. firm BioCryst (BCRX.O). Peramivir recently gained U.S. approval approval for emergency use to patients who are severely ill in hospital. [ID:nN21505080]

Shares of Daiichi Sankyo lost 2.8 percent to 1,746 yen, underperforming a 1.1 percent decline for the benchmark Nikkei average .N225. (Reporting by Yumiko Nishitani; Editing by Edwina Gibbs)