UPDATE 1-Angang to clarify iron ore reports, shrs suspended

* Angang halted after rising on news of China iron ore find

* China seen letting state-owned steel firms run mines -paper

* Asset will be gradually sold to listed companies -paper (Adds analyst comments and details)

HONG KONG, June 25 (Reuters) - Trading in shares of Chinese steelmaker, Angang Steel Co Ltd (0347.HK), was suspended on Thursday after the stock rose for a second straight day on news that China had found Asia's biggest iron ore deposits.

Angang (000898.SZ) was halted in Hong Kong and Shenzhen under exchange requests and it will issue a statement later to clarify recent media reports, a company spokesman told Reuters.

China is likely to let its state-owned steel firms, including the parents of Angang and Bengang Steel (000761.SZ), operate the newly found iron ore deposits in the northeastern province of Liaoning, Guangzhou Daily reported on Thursday.

The asset will be gradually sold to the listed companies, the newspaper quoted an analyst as saying.

Angang rose 3.22 percent in Hong Kong to HK$13.48 before the suspension in late morning. It rose 5.3 percent in Hong Kong and surged 7.4 percent in Shenzhen on Wednesday after China said it found the deposit, which has estimated reserves of at lest 3 billion tonnes. [ID:nPEK177215]

Both Angang and Bengang Steel, which rose to its 10 percent limit on Wednesday, were suspended on Thursday morning.

The discovery is positive as it should help to bring down Chinese steel producers' production cost and enhance their bargaining power in iron ore contract price negotiations, CIMB said in a research report on Thursday.

"Angang told us that it is keen to bid for ownership of the iron ore deposits," it said. But Morgan Stanley forecast Angang's share price will fall relative to the country index over the next 60 days.

"Yesterday's share performance, which appeared to benefit from a government announcement that a major iron-ore mine had been discovered in Liaoning province, appears vulnerable to a pull-back," it said in a research note on Thursday.

Morgan Stanley said its check with industry contacts revealed that the mine is 1 kilometre underground and the average grade is less than 30 percent ferrous content, which would make it a very high cost mine with little positive impact to China's steel industry or Angang. (Reporting by Joy Leung, Fion Li, Alison Leung and Parvathy Ullatil, Editing by Jacqueline Wong)