LONDON, Jan 30 The bid battle for Anglo-Dutch steelmaker Corus Group Plc is set to go to

LONDON, Jan 30 (Reuters) The bid battle for Anglo-Dutch steelmaker Corus Group Plc is set to go to the wire on Tuesday, with Tata Steel expected to raise its bid and spark an auction with Brazil's CSN.

Sources familiar with the matter told Reuters on Monday that Tata Steel would raise its offer to challenge a 4.9-billion-pound ($9.6 billion) deal agreed between Corus and Brazil's Companhia Siderurgica Nacional (CSN).

Tata Steel reported on Tuesday a 41 percent jump in net profit for the fiscal third quarter ended Dec. 31 to 10.63 billion rupees ($240 million), lagging expectations.

Britain's takeover watchdog has set a 1630 GMT deadline for bids and if Tata Steel raises its offer, it would kick-start a rapid-fire auction which could go through as many as nine rounds. The Takeover Panel will announce a winner by 0300 GMT or, if the process is not finished, it will update on the state of play before resuming the auction at 1630 GMT on Wednesday.

The winner of the battle, which has pushed Corus's share price to seven-year highs, will become the world's fifth-biggest steelmaker.

CSN has agreed a 515-pence-a-share offer for Corus, trumping two earlier bids from Tata Steel. But Corus shares are trading well above that level -- up 0.8 percent at 564 pence on Tuesday -- signalling investors are hopeful of a much higher bid.

CSN and Tata Steel are keen to buy Corus so they can become significant players in the consolidating steel industry, where Dutch-based Mittal Steel last year bought Luxembourg's Arcelor to create the world's biggest steelmaker.

(Additional reporting by M.C. Govardhana Rangan in MUMBAI).

($1=.5109 Pound) ($1=44.2 Rupees) REUTERS PV HS1720