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LONDON, July 24 (Reuters) Britain's largest insurer Aviva said on Monday it had expanded its reach in China with a sixth city licence, amid expectations it will focus on Asian projects after a $2.9 billion deal to grow in the United States.

Aviva said its joint venture would now be able to operate in Changsha, the capital city of Hunan province in south central China and home to 5.7 million people. Changsha is Aviva's second Chinese licence awarded this year.

The insurer, whose bid approach for rival Prudential was rebuffed in March, said earlier this month it had agreed to buy U.S. rival AmerUs, but said the deal did not signal the start of a U.S.

acquisition campaign.

Instead, analysts expect Aviva to grow in Asia, mostly with smaller deals it can fund with existing resources, after a 900 million pound ($1.7 billion) cash call to fund AmerUs.

''The reason why they wanted to buy into Pru was really to get access to the U.S. market and a bigger footprint in Asia,'' analyst Farooq Hanif at Credit Suisse said. ''There isn't much you can buy in Asia as a standalone life company, but you can do joint ventures with distributors like banks.'' Aviva already operates in India, Singapore and Hong Kong and has long said it is looking at the Taiwanese market. The insurer has declined to comment on recent reports it is in talks to set up a venture with local financial group Hua Nan.

Asia accounted for just 3 percent of Aviva's life and pensions sales outside the UK in 2005.

Aviva, working in China with joint venture partner Cofco, one of the country's largest state-owned enterprises, is the fifth-largest international player in China behind heavyweights including Generali, Allianz and Prudential.

Aviva targets an average market share of 10 percent in 10 major provinces and cities in China by 2010, up from a current market share of 4 percent, and says it will continue to grow in China during 2006.

But competition promises to be tough. Over the weekend, Prudential said its life insurance joint venture CITIC Prudential had been awarded a licence for the city of Hangzhou in China's Zhejiang province, its 14th city licence so far.

REUTERS SBA VV1708