UPDATE 3-Panama Canal says Sacyr, Impregilo give best bid

* Bid is below Canal Authority's target price

* Winner of contract not yet announced

* Project important for Panama's fight against slowdown
(Adds details on total assessment of proposal, updates
stocks)

By Elida Moreno

PANAMA CITY, July 8 (Reuters) - A consortium led by Spanish
company Sacyr Vallehermoso and Impregilo of Italy submitted the
best bid on a contract for the largest chunk of a project to
expand the Panama Canal, the Canal Authority said on
Wednesday.

The consortium submitted a $3.12 billion bid, which was the
lowest among its rivals and below the target price of $3.48
billion, also announced on Wednesday by the canal authority, or
ACP.

The bid appears to put the consortium on the inside track
on winning the contract, with the ACP saying that it submitted
the "best value" proposal, which reflects both price and
technical proposals.

The ACP, a government entity that administers the canal and
is overseeing the bidding, may take several weeks before
announcing a winner.

The contract is to build new locks and water-saving basins.
It is the largest portion of a $5.25 billion project to expand
the interoceanic canal, which handles about 5 percent of all
global trade.

The project is part of Panama's efforts to fight back
against sharp economic slowdown by spending more on
infrastructure.

"It's very important for Panama and its economy," said ACP
President Alberto Aleman.

The expansion, due to be finished in 2014, will allow much
larger ships to transit the canal.

PRESIDENT PLEASED

Panamanian President Ricardo Martinelli, who campaigned on
promises to boost public spending before taking office this
month, said he was happy that the lowest bid on the contract
was below the ACP's target price.

"I am pleased," he said.

Officials will award the contract based on each firm's
price offer and its technical proposal, and the ACP said
Impregilo and Sacyr's consortium scored best in terms of
combined value. A technical board will now verify the ACP's
assessment before the deal is sealed.

Shares of Impregilo SpA (IPGI.MI), Italy's No. 1
construction group, rose sharply after the announcement, but
later ended 0.16 percent lower. Spanish builder Sacyr (SVO.MC)
edged up 0.21 percent.

Hit by a drop in global trade, Panama's economy is expected
to grow about 3 percent this year, down from average annual
growth of 8.8 percent in the period 2004-2007.

Of the other two bidders in the process, a consortium
including Spanish giants ACS (ACS.MC), FCC (FCC.MC) and Acciona
(ANA.MC) and Mexican company ICA (ICA.MX) bid $5.981 billion.

A consortium led by privately owned U.S. firm Bechtel bid
$4.186 billion. Bechtel had teamed up with Japan's Taisei Corp
and Mitsubishi Corp (8058.T).
(Writing by Jason Lange; Editing by Richard Chang)