UPDATE 1-NZ court places halt on Warehouse takeover clearance

(Updates with details, background)

WELLINGTON, Dec 19 (Reuters) - New Zealand's Warehouse Group Ltd (WHS.NZ) said on Wednesday a court had suspended an order allowing bids for the company, pending a further appeal by the competition regulator.

The High Court last month overturned a ruling by the Commerce Commission which prevented Australian retailer Woolworths Ltd (WOW.AX) and New Zealand cooperative Foodstuffs bidding for The Warehouse.

The court suspended that decision on Wednesday and will hold a hearing on Jan. 29 to decide whether the regulator is allowed to challenge the ruling in the Court of Appeal.

Analysts have said that if the two chains, which dominate grocery retailing in New Zealand, are allowed to bid a deal could value Warehouse, New Zealand's largest retailer, at NZ$2.5 billion ($1.9 billion).

Shares in Warehouse tumbled 11 percent on Tuesday after the regulator said it would appeal the court decision.

Analysts said the takeover saga, which has already lasted more than a year, could be drawn out for at least another six months if there is an appeal hearing.

Warehouse recovered 1.8 percent at NZ$5.57 on Wednesday.

The court had ruled there would be no lessening of competition if either of the grocery chains bought the general goods retailer, because its planned move into grocery retailing with its Warehouse Extra stores was likely to be limited in scale.

Woolworths and Foodstuffs, each own 10 percent of The Warehouse.

Analysts have said that Woolworths would have a better chance of winning any takeover battle because of its financial strength.

Warehouse sells a broad range of general merchandise in its 85 "Red Shed" stores. It is about 50 percent owned by founder Stephen Tindall and interests close to him. (NZ$1=$1.32) (Reporting by Adrian Bathgate; Editing by James Thornhill)