UPDATE 1-AMP wants AXA deal price to be responsible

* AMP seen attempting to manage expectations

* CEO says proposal very compelling offer * AXA shares drop by over 3 percent (Adds comment, share reaction)

By Morag MacKinnon

MELBOURNE, Nov 17 (Reuters) - Australian wealth manager AMP Ltd (AMP.AX) took aim at speculation it would raise its around $11 billion joint bid with French insurer AXA SA (AXAF.PA) for AXA Asia Pacific Holdings (AXA.AX), saying on Tuesday that the price had to be economically responsible.

AMP Chief Executive Craig Dunn also told a business lunch on Tuesday that the proposal was compelling and made strategic sense, in remarks analysts said were an attempt to cool speculation that a revised bid could come as soon as Friday.

"AMP are using a bit of rhetoric to try and manage expectations," said Jamie Spiteri, head of institutional sales at Shaw Stockbroking. "Ultimately, I think there will be a sweetener."

AXA Asia Pacific last week rejected a cash and share offer from AMP and AXA SA worth A$12 billion ($11 billion), based on Tuesday's share price. Under the bid, AMP agreed to sell AXA Asia Pacific's Asian arm to its French parent for around A$7.7 billion.

AXA shares have traded above the implied offer price since the proposal was unveiled on Nov. 9, suggesting that market participants are betting on a revised higher bid.

"Combining with AXA would accelerate the delivery of key parts of our strategy and make us even more competitive, but it only makes sense at a price that's economically responsible," Dunn said.

"We're a very financially disciplined company and will remain so."

AXA shares extended losses after the remarks to fall by as much as 3.2 percent, and were trading down 2.5 percent at A$5.84 by 0154 GMT.

"This is an open warfare and the golden principle is they want to buy it as cheap as they can," said Markus Mueller, a director with stockbroker Reynolds & Co. (Additional reporting by Denny Thomas) (Editing by Jonathan Standing)