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CORRECTED - UPDATE 2-British Energy shares drop as auction hopes fade

Fri May 9, 2008 7:41am EDT

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(Corrects current value of government stake in paragraph 13) (Releads, adds Centrica comment, detail, shares)

By John Bowker and Mathieu Robbins

LONDON, May 9 (Reuters) - Shares in nuclear power generator British Energy Plc BGY.L fell over 3 percent on Friday on fading hopes that a bidding war would push up the price for the stake being sold by the UK government.

As a bid deadline approached on Friday, no bidder seemed poised to offer a premium to British Energy's closing share price on Thursday of 715 pence.

France's EDF will offer "substantially" less than 700 pence per share, according to a source familiar with the matter, and a separate source said Spain's Iberdrola (IBE.MC) wanted to link up with a rival to bid, rather than make its own offer.

RWE (RWEG.DE), another touted bidder, is also expected to offer less than 700 pence a share, according to sources familiar with the matter, while Handelsblatt newspaper said the Essen-based utility might not bid at all.

The owner of Britain's nPower had previously been expected to team up with Sweden's Vattenfall [VATN.UL], but the Swedù


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