Chinese sovereign fund eyes Dresdner buy: paper

FRANKFURT (Reuters) - China's sovereign wealth fund China Investment Corp (CIC) is in "intensive talks" to buy the whole of Allianz's (ALVG.DE) Dresdner Bank, a German newspaper reported on Thursday, citing industry sources.

The Sueddeutsche Zeitung said the talks between CIC and Allianz were continuing.

CIC, Allianz and Dresdner declined to comment.

CIC, which manages $200 billion, has said it will be a financial investor and not seek control when it invests.

Some policy makers in China have been urging caution on investments abroad, saying the country lacks expertise, while others argue that the decline in foreign shares presented a good opportunity for funds to diversify.

CIC is smarting from losses on the $3 billion it paid for a 9.9 percent stake in U.S. private-equity group Blackstone (BX.N) last May. Blackstone's shares have fallen by nearly half since its initial public offering.

Germany's manager magazine had reported on Wednesday that a Chinese bank was interested in buying Dresdner's corporate and investment banking activities, known as Dresdner Kleinwort.

The magazine did not cite sources for its report that a Chinese bank, which it did not identify, had already made an offer, even though the books at the unit were not yet open.

Allianz shares had risen 2.9 percent to 122.86 euros by 8:40 a.m. EDT, outpacing a 2 percent gain in European insurance peers.

(Reporting by Jonathan Gould; Additional reporting by Alan Wheatley in Beijing; Editing by David Holmes/Rory Channing)