ABN jumps on Barclays merger approach - sources

LONDON/AMSTERDAM, Mar 19 (Reuters) Shares in ABN AMRO, the Netherlands' biggest bank, surged on Monday after Britain's Barclays approached it with a merger plan for Europe's biggest financial services deal, sources said.

Barclays, Britain's third biggest bank, approached its Dutch counterpart with a merger blueprint that would create a global bank worth about 0 billion, as speculation of a takeover or break-up of ABN AMRO intensified, sources familiar with the matter said.

Barclays, with a big presence in Europe and Africa, acknowledged press speculation about its interest in Amsterdam-based ABN AMRO and said it would clarify its position before stock markets open on Tuesday.

A Barclays' approach is widely expected to spark rival offers from other international banks for ABN.

The British bank's holding statement indicated it has or has had some recent interest in ABN, which owns large retail banks in the United States, Brazil, Italy and the Netherlands.

Several other banks, including Dutch rival ING, Spain's BBVA and France's BNP Paribas have also expressed interest -- directly or through advisers -- in either exploring a full merger with ABN AMRO or buying some of its large non-Dutch businesses, sources told Reuters on Sunday.

ABN it has come under pressure from investors, including British hedge fund TCI, to consider a sale or breakup to boost shareholder returns after several years of underperformance. TCI declined to comment on Monday.

By 0930 GMT ABN shares were up 7.3 percent at 29.30 euros, lifting its market value to 56 billion euros (.6 billion).

Barclays shares were up 0.5 percent at 686 pence, valuing it at 45 billion pounds (.6 billion).

Any talks are at an early and uncertain stage, sources said.

''An approach by Barclays is realistic in our view,'' analysts at Keefe, Bruyette&Woods said in a research note, estimating that Barclays could offer 31.3 euros per ABN share, and go higher if it sold off some units that did not fit its plans.

''If confirmed, we believe that an offer by Barclays is likely to trigger counter offers by other international banks,'' KBW added.

An ABN AMRO spokesman gave no comment on whether it planned to issue a statement.

Shares in ING were up 1.9 percent, BBVA was up 0.2 percent and BNP was up 1.7 percent.

Fortis, which has been seen as a possible merger partner in the past but may only be interested in coming in as a ''white knight'' or taking some assets, was up 1.6 percent.

UP FOR GRABS Many industry analysts and bankers regard ABN as being ripe for a sale or breakup.

TCI said in February ABN was significantly undervalued and called on it to merge, sell or spin off some of its assets or potentially the whole business, and other investors, including hedge fund Toscafund, have also called for change.

Barclays has made no secret of its plans to expand internationally. John Varley, chief executive, last month said acquisitions were an option.

Industry analysts have said a combination of ABN and Barclays would make good strategic sense, but so would a deal between ABN and many of the big European banks.

In addition to its strong retail presence in several countries, ABN's retail-focused fund management arm could fit well with Barclays Global Investors, which mainly has institutional clients.

It is less clear how ABN's investment bank business, which includes UK corporate broker Hoare Govett, would fit with Barclays Capital, which has built a strong position in debt capital markets in recent years under Diamond.

Shares in Italian bank Capitalia jumped 4.9 percent as ABN is its biggest shareholder and traders speculated that a bid for it could knock on to Capitalia, which has long itself been a focus for takeover rumours.

REUTERS PV BD1610