May 10, 2007 / 2:07 AM / 12 years ago

UPDATE 1-China Eastern, Singapore Air in final talks -paper

(Adds Singapore Airlines comment, background)

SHANGHAI, May 10 (Reuters) - China Eastern Airlines (600115.SS) (0670.HK) (CEA.N) is in final talks to sell a strategic stake to Singapore Airlines (SIAL.SI), state media said on Thursday, but the Singapore carrier said no decision had been reached.

“The airlines are talking about possible cooperation, but there have been no decisions to pursue any other relationship at this point in time,” a Singapore Airlines spokesman said.

The China Securities Journal reported that the two airlines had started to negotiate the price of the stake sale, quoting sources close to the mainland carrier. It gave no further details.

China Eastern spokesman Luo Zhuping declined to comment.

A source close to the Shanghai-based company, the smallest of China’s top three airlines, has said it would most likely cap a stake sale at 20 percent.

The investment, if it goes ahead, could give China Eastern access to Singapore Airlines’ extensive global network. It could also enable it to better compete with domestic rival Air China Ltd. (0753.HK).

China Eastern’s Shanghai-listed A-shares rose 4.55 percent to 7.820 yuan by 0200 GMT, after rising their 10 percent daily limit on Wednesday.

Its Hong Kong-listed shares were up 7.12 percent, compared with a 0.74 percent drop in Hong Kong's benchmark Hang Seng Index .HSI.

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