UPDATE 2-Macarthur Coal says still in talks amid bid reports

(Adds details, updates share price, changes dateline)

By Fayen Wong

PERTH, May 5 (Reuters) - Australia's Macarthur Coal Ltd (MCC.AX) said it was still in talks with an unnamed third party, but had received no formal proposal, as media reported a Chinese shareholder was lining up a $830 million deal to raise its stake.

Responding to continuing market speculation, Macarthur said on Monday it was likely discussions with the third party would take a considerable time to complete, with no certainty any formal proposal would be made.

"As such, any reference to the quantum of any proposal in recent media speculation is incorrect," Macarthur said in a statement.

China's state-owned CITIC Group, which owns 19.9 percent of Macarthur, is considering a bid to raise its stake in the coal miner in a deal estimated to be worth $830 million, the South China Morning Post quoted unnamed sources as saying on Monday. [IDnHKG66348]

The paper said Switzerland-based mining giant Xstrata Plc (XTA.L) was also in takeover talks with Macarthur Coal, while BHP Billiton (BHP.AX), Rio Tinto (RIO.AX) and Brazil's Vale (VALE5.SA) had considered bidding for the stake held by CITIC and Macarthur's founder Ken Talbot, who has been selling down his stake of around 24 percent.

It added that Australian mining tycoon Nathan Tinkler, who owns about 10 percent of Macarthur, would follow Talbot in selling his stake in the coal miner.

A spokesman for Xstrata declined comment on the report, while CITIC was not immediately available for comment.

Macarthur said in April it had been approached by a potential buyer and the suitor had already approached the company's major shareholder.

Shares in Macarthur Coal, which has a market capitalisation of about A$3.8 billion ($3.6 billion), were down 0.2 percent at A$17.71 by 0300 GMT, compared with a 0.9 percent gain on the benchmark S&P/ASX 200 index .AXJO.

Its shares have jumped by a third since April 18 after it said that it was in takeover talks with an unamed group.

Demand for coal from Australia, the world's biggest exporter, has outstripped supply this year, driving coal prices up as much as 300 percent to the highest ever.

Australia's coal miners, benefiting from the sky-high prices, have been vying to control larger portions of the export market, while China has an ever-increasing footprint on the local sector.

Xstrata in March paid A$1.09 billion for another Australian coal miner, Resource Pacific, and has spent billions more buying other outback miners.

China Coal Energy (1898.HK) (601898.SS), China's No. 2 coal miner, last month also said it too was looking for investments in Australia.

CITIC was formed by Beijing to help China garner raw materials from outside its borders to help fuel the country's massive industrialisation.

Macarthur, which mostly mines coal for steel making in northern Queensland state's Bowen Basin, has appointed JP Morgan and McCullough Robertson as its financial advisers. ($1=A$1.07) (Reporting by Fayen Wong; Editing by James Thornhill and Lincoln Feast)