UPDATE 1-Swire soars to 20-mth high on spinoff hopes

* Spinoff could raise about HK$30-40 bln -CLSA

* Seen funding development of property business

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HONG KONG, Nov 3 (Reuters) - Shares of Swire Pacific (0019.HK) rose 6.3 percent to a 20-month high on Tuesday after the conglomerate said it was considering spinning off its property unit on the mainboard .

The shares rose to as high as HK$101, the highest since Feb. 5, 2008, before steadying at HK$98.20, still up 3.4 percent and bucking a 0.43 percent fall in the boarder market .HSI.

Bank of America Merrill Lynch in a research note on Tuesday upgraded Swire to "buy" from "underperform," saying the spinoff could unlock the value of Swire's non-property businesses including beverage and oil services.

"We think Swire may be renewing its focus on property development in Hong Kong," the brokerage said, adding Swire may need to raise new funds for landbank acquisition. It raised Swire's price target to HK$110 from HK$75.

Swire Pacific said on Monday that it was considering a separate main-board listing for Swire Properties, a division that holds hotel interests in Hong Kong, the UK, and the United States, but that no final decision had been made. [ID:nHKG129751]

A CLSA research note said the spinoff could raise HK$30-40 billion ($3.9-$5.2 billion) and "create an efficiently priced vehicle that could fund aggressive future growth."

"The quality of the property will assure a premium rating but the remaining assets of Swire Pacific, comprising aviation, marine services, beverages and trading is likely to trade at a steeper discount." it added added.

Shares of Asia's No.4 air carrier Cathay Pacific (0293.HK), a unit of Swire Pacific, fell 1.1 percent.

The listing is expected in the first half of next year, according to some media reports.

"We believe the market will take this news positively, as it appears to us to signal the group's intention to develop its property businesses more aggressively," Goldman Sachs said in a research note.

"On the other hand, it remains uncertain how the potential spinoff would change its growth strategy and project execution," the note added, maintaining a "neutral" rating on the stock.

Swire Properties, which was first listed in June 1977, was taken private by its parent and delisted from the stock exchange in July 1984. It reportedly tried to list its property projects in 2007 in the form of a real estate investment trust. (US$1=HK$7.75) (Reporting by Donny Kwok; editing by Jonathan Hopfner)