UPDATE 1-Irish insurer FBD rejects approach from Eureko

(Adds comment from Eureko spokesman)

DUBLIN, April 27 (Reuters) - Ireland's FBD Holdings Plc (FBD.I) said on Sunday its board had rejected an approach from the Netherlands' biggest insurer Eureko, partly owned by unlisted Rabobank [RABN.UL].

A spokesman for Eureko said late on Sunday, however, negotiations were still in progress.

"We are talking and of course we are not talking for nothing," he said.

Earlier this month, Eureko said it had made an expression of interest to Irish insurer FBD although there was no binding offer.

Irish media has valued the potential deal around 1.2 billion euros ($1.9 billion).

FBD said in a statement it had received a further letter of approach from Eureko.

"The board again confirms that it has not received an offer or an intention to make an offer," it said.

FBD said its board, in conjunction with its advisers Goldman Sachs International and Goodbody Corporate Finance, considered all aspects of the approach and concluded it was "entirely without merit."

"Accordingly, the board rejects this approach," it said. Eureko already has a presence in Ireland and has Irish financial services group Friends First as a subsidiary.

Ireland's Sunday Business Post, without citing sources, reported that Eureko proposed to merge FBD with Friends First into a newly listed company on Dublin's stock exchange.

A source familiar with the proposal said Eureko would offer existing FBD shareholders a minority stake in a new vehicle that would be controlled by the Dutch group. The proposal also offered a partial cash alternative instead of shares.

The Eureko spokesman said he could not comment on the Sunday Business Post story.

Eureko is the Netherlands' largest insurer with more than 4.7 million clients, due to its merger with Agis in December.

FBD, which faces mounting competition in the Irish insurance market, also has interests in hotels, golf courses and holiday property developments. ($1=.6413 Euro) (Reporting by Jonathan Saul; Additional reporting by Alexandra Hudson in Amsterdam; Editing by Maureen Bavdek)