REFILE-UPDATE 1-Kazakhstan sets up funds to push innovation

(Corrects to add missing word "to" in headline) (Writes through with quotes, backgroud)

By Mariya Gordeyeva

ALMATY, April 29 (Reuters) - Kazakhstan will team up with the European Bank for Reconstruction and Development (EBRD) and other big investors this year to set up several funds to promote innovative projects, officials said on Tuesday.

The Kazakh government, keen to diversify central Asia's biggest economy away from oil and metals, wants to cooperate with the EBRD and other investors to push new sectors such as information technology, telecoms and alternative energy.

Arman Dunayev, head of the Kazakh state fund Kazyna, told reporters Kazakhstan was in talks with several big investors including the EBRD and China to jointly invest in various projects also including infrastructure and chemicals.

"We plan to set up two or three funds by the end of this year," he said. "We will not just sign documents. We plan to complete transactions."

The EBRD [EBRD.UL] said in an earlier statement it planned to invest up to $94 million in a Kazakh state-controlled private equity fund to invest in private companies in Kazakhstan and beyond.

It said both the EBRD and Kazyna will have stakes of 50 percent minus one share in the fund, while a special management company will own the remaining two shares.

With its vast natural resources, Kazakhstan is keen to make its economy less dependent on global prices for its key exports, especially at a time when tighter global liquidity is biting into its ambitious economic expansion plan.

The government has already cut its gross domestic product forecast to between 5 and 7 percent in 2008, a slowdown from last year's 8.5 percent and an annual average of about 10 percent since 2000.

Separately, Dunayev said Kazakhstan was in talks with what he described as a "big Chinese company" to set up a similar joint investment fund.

"Potentially the fund could draw investment of up to $1 billion," he said without naming the Chinese company. "Initially each side will invest $100 million to $200 million." (Writing by Maria Golovnina; Additional reporting by Olzhas Auyezov; Editing by David Holmes)