* Three key hurdles loom for BHP's Potash bid in next 8 days
* BHP not going to hike bid before clearing hurdles - source
* BHP investors question need for higher bid if no rival bid
* Potash shares still trade above BHP's offer
By Sonali Paul and Michael Smith
MELBOURNE/SYDNEY, Nov 1 (Reuters) - BHP Billiton feels no pressure to raise its $39 billion offer for Potash Corp since no rival has emerged, and is focused on clearing three hurdles, a person familiar with the situation said.
The Sunday Times newspaper in London reported BHP planned to sweeten its offer for the world's biggest fertiliser maker by 10 percent, citing sources close to the situation.
A person familiar with the situation said BHP was working on surmounting three legal and regulatory obstacles over the next eight days, including winning approval from Canada, before it did anything else.
Major BHP investors said the company should be wary about bumping up the bid price and several objected to an increase of more than 10 percent.
Canada was due to decide by Nov. 3 whether BHP's bid for Potash Corp will bring a net benefit to Canada, which would allow it to clear the bid or approve it with conditions.
When asked if BHP could raise its offer ahead of the Nov. 3 ruling by Canada, the person said: "No."
"There is only one offer on the table," the person added.
BHP Billiton, the world's biggest mining group, declined to comment on whether it plans to raise its bid by 10 percent, but its investors were cautious about any sweetener.
"They (BHP) could well put forward one final bid to get it over the line," said James Holt, investment specialist at BlackRock Investments, BHP's biggest single shareholder.
"But the much bigger issue is that there hasn't been any white knight that has come along. It's become quite clear there are very few people out there with the capacity to buy (Potash) out."
NO WHITE KNIGHT
BHP has not ruled out raising its offer, but to date has kept reminding the market that its offer is the only one on the table.
Another top 10 shareholder based in London said: "If BHP raise their current offer by 10 percent, we could live with that. But anything beyond that level would destroy value.
"It's just a case of how much you are willing to give the other side. It's difficult for any deal to stack up beyond that (10 percent) level," said the investor, who declined to be identified.
If BHP sweetens the offer to a price that exceeds 25 percent of its own market capitalisation, now around $216 billion, it may also have to seek the approval of its own shareholders.
In a Reuters poll in September, BHP investors said the group should not raise its bid to more than $155 a share, a rise of 19 percent.
But at the moment BHP is tackling more more pressing issues, including convincing Canadian authorities to give a green light to the deal.
Canada's ruling Conservatives are under pressure from Saskatchewan, home to Potash, and four other provinces to block the bid, but Industry Minister Tony Clement has said Canada needs to be open to foreign investment.
After Canada's decision, a U.S. court is due to hear on Nov. 4 Potash's call for an injunction to stall BHP's bid on the grounds it did not give enough information about its intentions.
The final regulatory hurdle is a hearing on Nov. 8-9, when Saskatchewan's securities watchdog is set to hear BHP's challenge to Potash's poison pill. BHP wants the shareholder rights plan suspended, while Potash wants it extended to give time for a white knight to emerge.
Potash dismissed BHP's hostile offer of $130 a share in August as totally inadequate but has failed to line up an alternative offer for shareholders so far, saying that other potential bidders need more time to line up financing.
Given that BHP has said it has been eyeing Potash for a long time and potash as a commodity has all the characteristics that BHP wants -- large, low cost, long-life, expandable and exportable -- investors are betting BHP will raise its offer to seal a deal.
Potash Corp shares last traded at $145.90, 12 percent above the offer price.
Some shareholders would be relieved if Canada blocked the bid or BHP decided not to raise the offer.
"I would be very concerned if they raised the bid. I think the price is full," said a fund manager in Sydney, who declined to be named. "I'm yet to be convinced it's a compelling acquisition."
BHP shares in London rose 0.79 percent to 2231 pence by 1314 GMT, outperforming a 0.55 percent firmer British mining index, which gained on the back of a rally in metals prices.
Liberum Capital in London said BHP investors would benefit whichever way the regulatory decision went. A denial would allow the group to return capital to shareholders.
"With the deadline for Canadian government approval on Wednesday, we see asymmetric upside to BHP in the event that either the deal is blocked, and thus a buyback is likely initiated, or they are able to succeed with only a small bump to their original bid." (Addtional reporting by Raji Menon and Eric Onstad in London; Editing by Anshuman Daga and Michael Shields)