UPDATE 1-China Southern chairman to move to rival-sources

(Adds response from airlines, details)

SHANGHAI/BEIJING, Dec 12 (Reuters) - Liu Shaoyong, chairman of China Southern Airlines (600029.SS), has been appointed chairman of rival China Eastern Airlines (600115.SS) by the central government, two sources familiar with the situation said on Friday.

The sources were confirming a report by the online edition of major Chinese financial magazine Caijing, which quoted an unnamed source as saying the management reshuffle was part of preparations for a possible takeover of smaller Shanghai Airlines 600591.SS by China Eastern.

China Eastern's spokesman Luo Zhuping said he had no information on the reshuffle and executives at China Southern, the country's biggest airline by fleet size, could not be reached immediately for comment.

The government is discussing the possibility of brokering a merger of the two Shanghai-based airlines to create a dominant player with a 60 percent share of domestic flights in China's financial hub, sources familiar with the matter had told Reuters.

The move calls for China Eastern to take a 60 percent stake in Shanghai Air following a government cash injection to China Eastern, local media reported in October.

Debt-ridden China Eastern this week unveiled a share placement plan to its state parent in exchange for a 3 billion yuan cash injection the parent received from the government. (Reporting by Fang Yan and Hua Zhongwei; Editing by Jacqueline Wong)