UPDATE 1-Rio, Chinalco may revise $19.5 bln deal before June 14

* If deal revised, would be before June 14

* A new deal could cut Chinalco stake to 14.9 pct - analyst

* New deal could include rights offer

* Rio, Chinalco hope for Australian approval by mid-June (Adds details, fund manager comment)

By Sonali Paul

MELBOURNE, June 4 (Reuters) - Miner Rio Tinto Ltd/Plc (RIO.AX) (RIO.L) and China's Chinalco may revise their planned $19.5 billion tie-up before a June 14 deadline, to avoid a further delay in Australian government approval, a source close to the transaction said on Thursday.

As the deal stands, state-owned Chinalco would pay $12.3 billion for stakes in debt-saddled Rio's key iron ore, copper and aluminium assets and $7.2 billion for convertible notes that would double its equity stake in Rio to 18 percent.

It has run into opposition from shareholders, who have complained the deal favours Chinalco over other shareholders, and from some who are worried China, Rio's biggest customer, will gain influence over pricing of key commodities like iron ore.

"From the perspective of Rio Tinto, there's big pressure from shareholders to change it. Unfortunately, it's a bit embarrassing for them and not very convenient, in terms of maintaining relations with Chinalco," said Peter Chilton, an analyst with Constellation Capital Management, which owns Rio Tinto shares.

He said it looked like a revised deal may reduce the bond issue to Chinalco, limiting its stake to 14.9 percent, and would include a rights issue to all shareholders.

Rio Tinto's shares fell 5.1 percent to A$67.96, while bigger rival BHP Billiton's (BHP.AX) (BLT.L) shares were down 4 percent at A$35.53.

Australia's Foreign Investment Review Board (FIRB) is due to give its recommendation on the deal to Australian Treasurer Wayne Swan by June 14. Swan has the final say on whether it will go ahead.

If the deal was revised after being approved, it would need to be resubmitted to FIRB as a fresh proposal and could face further delays.

"If there was a chance the deal needs to be amended, the companies would notify FIRB of that before a FIRB decision on the current application," the source said.

It would be up to the FIRB to decide whether to approve the revised application by the current June 14 deadline, or extend the review, depending on how substantive the changes are, the source and another close to the process said.

"Rio and Chinalco would prefer if the clock remained ticking on the current timetable," the source said.

Chinalco declined to comment on the status of negotiations, which would be China's biggest foreign investment. Rio Tinto's spokeswoman in Australia did not immediately respond to an email and telephone calls seeking comment.

Rio originally lined up the deal in February to help pay off half its $38 billion in debt, and had hoped then to complete the deal by early in the third quarter. However commodity, equities and credit markets have improved since then, making the deal less attractive to shareholders.

The company has said it is listening to shareholders' concerns, and said last week it remained committed to the deal.

Chinalco has said publicly that it would not like to see its stake reduced below 15 percent and did not want to see any changes to the asset side of the deal. (Editing by Jonathan Standing)