UPDATE 1-Del Vecchio not steering for Generali, AXA merger - source

* Del Vecchio seeking approval to double Mediobanca stake

* Mediobanca top investor in Italy’s Generali

* Del Vecchio move rekindled M&A speculation around Generali

* Shares in Axa rise 9%, Generali, Zurich up 4% (Adds comments, background)

MILAN, June 3 (Reuters) - Leonardo Del Vecchio’s plans to boost the European presence of Italy’s top insurer Generali do not include a cross-border merger with rivals AXA or Zurich, a source close to the billionaire said on Wednesday.

Del Vecchio, the 85-year-old founder of Ray-Ban owner Luxottica, on Friday filed a request with the European Central Bank to increase his stake in Generali’s biggest shareholder Mediobanca to as much as 20%, from just below 10% at present. He already owns 4.8% of Generali.

His move raised concern in Rome that he may want to seek a tie-up for Generali, distancing the insurer from its home turf and weakening the support it can provide the country, as a large holder of government bonds, at a time when COVID-19 spending is inflating Italy’s already high funding needs.

But a source close to Del Vecchio ruled out a merger with either AXA or Zurich, the two rivals generally seen as the most likely partners for Generali.

The source said Del Vecchio, who has built his eyewear empire from scratch, wanted to restore the leading position Generali enjoyed in Europe in the 1990s, adding it was too early to provide any details on strategy.

The Trieste-based insurer has seen its market capitalisation slip to around 20 billion euros, roughly half that of AXA.

Del Vecchio, a long-time investor in Generali, late last year built a holding in Mediobanca. He became the single biggest shareholder in the Milanese bank after its decades-long partner UniCredit sold its stake in November.

His move into Mediobanca has sent shockwaves through Italy’s financial world as there has not been a single non-banking shareholder owning more than 10% since it was founded in 1946.

Mediobanca’s board is coming up for renewal in October.

The source said Del Vecchio had not requested any representatives on Mediobanca’s board “as a sign of respect for the authorisation process underway with the ECB.”

The ECB has 60 working days to rule on the request.

Shares in Axa rose 9% by 1300 GMT with Zurich and Generali up around 4%. (Additional reporting by Gianluca Semeraro; editing by Valentina Za and Elaine Hardcastle)