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UPDATE 1-UAE's Aabar says mulling Daimler stake increase

* Aabar chairman says considering Daimler stake hike

* Daimler declines comment

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DUBAI, Nov 16 (Reuters) - Abu Dhabi's Aabar Investments AABAR.AD is looking to beef up its stake in German carmaker Daimler AG DAIGn.DE, Aabar chairman said on Monday.

Daimler in Germany declined comment on Aabar’s intentions, which would be in line with Abu Dhabi’s plans to diversify its economy away from heavy reliance on oil revenue.

Asked whether Aabar was considering boosting its position in Daimler, Khadem al-Qubaisi told Reuters by telephone: “Yes.” He did not elaborate.

Aabar, an investment firm controlled by the International Petroleum Investment Co (IPIC), which is wholly owned by the government of Abu Dhabi, holds a 9.1 percent stake in Daimler.

Earlier on Monday, Daimler and Aabar agreed to jointly acquire the majority of champion Formula One team, Brawn GP, strengthening ties between the two firms. [ID;nFAB015327]

IPIC is one of the investment vehicles used by the Abu Dhabi government to invest oil income. Abu Dhabi pumps most of the oil produced by the UAE, the world’s third-largest oil exporter.

In March, Aabar purchased a 9.1 percent stake in Daimler, saying then it would pursue joint strategic projects.

In August, Aabar said it was setting up vehicle and engine manufacturing plants in Algeria with five German firms, including affiliate Daimler.

Fuelled by a six-year oil boom, Abu Dhabi has invested billions of dollars in developing its infrastructure and propelling itself on the global stage.

It is already building a cultural island district, housing offshoots of the Louvre and Guggenheim museums.

IPIC’s chairman Shaikh Mansour bin Zayed al-Nahyan last year bought British Premier League soccer club Manchester City.

Aabar has been on the expansion trail since IPIC took control of the firm last year. (Reporting by Amran Abocar; Writing by by Inal Ersan and Hans Peters)

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