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Long-running interest in the Australian brewers beer business resurfaced on Monday after Britains Sunday Times reported that SABMiller was considering buying the unit.

Fund managers are divided over whether a suitor would emerge before Australias largest brewer formally splits off the wine division in 2011 or wait, with complex debt and structural issues to be resolved.

Fosters has one of the highest-margin brewing operations in the world with brands including Fosters Lager, Victoria Bitter and Pure Blonde.

Analysts say Fosters beer business is an attractive target for drinks firms such as Molson Coors TAP.N, which owns a 5 percent stake in Fosters, and Coca-Cola Amatil CCL.AX.

SAB and Asahi are the two names that keep popping up and given the demerger process in train you would expect people who ever thought they might look at Fosters to get teams together to do so, said one source familiar with the situation. He declined to be named as he was not authorized to speak to the media.

Another source said Asahi, Japans No.2 brewer after Kirin Holdings 2503.T, remained interested. Nomura and Rothschild are advising Asahi on this. Asahi declined comment.

Fosters said in May it would split the beer unit from its ailing wine business, putting Fosters beer operations at the center of takeover talk in the drinks sector.

A takeover of Fosters beer would be the second largest takeover deal in the global food and drinks sector this year, according to Thomson Reuters data.

The takeover talk pushed Fosters shares up more than 6 percent to their highest level in more than two years, with volume 3.0 times the daily average over the past 30 days.

By 0500 GMT 1 a.m. EDT, the shares were up 6.2 percent at A$6.18.

SUITORS GATHER

A number of potential suitors including SABMiller and Asahi have been looking at the business since Fosters announcement to split its beer and wine operations, two sources said, adding neither had formally decided whether to make an offer.

Fund managers are divided over whether a suitor would emerge before Fosters formally splits off the wine vision in 2011 or wait, with complex debt and structural issues to be resolved.

Responding to media reports, Fosters said on Monday it was not aware of any unannounced information driving the stock.

Analysts value Fosters at around 13 times forward earnings. However, most of the companys value is locked into the beer operations following a string of writedowns on its underperforming wine business.

It a takeover is probably not too likely in the near future but once separation happens there will be some definite interest, said Daniel Nelson, investment analyst at Constellation Capital, which owns Fosters shares said.

From a margin perspective it is a very profitable market and the cash could be used to fund some of the developing market aspirations.

Sydney-based Gresham Advisory Partners is advising Fosters.

The Australian newspaper reported on Monday that SABMiller had hired JPMorgan and Royal Bank of Scotland as advisers for a potential bid but no decision had been made.

SABMiller owns the brewing rights to Fosters in the United States.

Asahi President Naoki Izumiya said this month he expects to have $9.2 billion for acquisitions over the next five years, with eyes on Asia and Oceania.

Japanese brewers have been scrambling to diversify, mainly by overseas acquisitions, to cut their reliance on the local beer market, which has lost 15 percent in volume in the past decade due to a sputtering economy and shrinking population.

SABMiller, the maker of Peroni and Miller Lite, generates about 85 percent of its profits from the emerging markets of Latin America, Africa and Asia.

Coca-Cola Amatil which has an Australian joint venture with SABMiller, was also a likely predator, analysts say.

$1=.6431 Pound

Writing by Dhara Ranasinghe; Additional reporting by James Topham in Tokyo; Editing by Anshuman Daga

Broad investor concerns about the global economic recovery are weighing on regional stocks which fluctuated through positive and negative territory following a string of weak economic data releases from the United States last week.

Political uncertainty pulled the Australian dollar down initially to a one month trough of $0.8833 but the unit made a quick rebound to trade at $0.8905, down 0.4 percent.

Australian stocks also rebounded after an early fall to trade flat, led almost entirely by a rally in miners on expectations that Prime Minister Julia Gillard would fail to form a government, spelling the end of her 30 percent tax on major iron ore and coal mines. The conservatives have vowed to scrap the mining tax.

The reversals in the Aussie and Australian stocks also followed a media report the countrys largest brewer Fosters Group FGL.AX was selling its beer operations to SABMiller SAB.LSABJ.J for about 7 billion pounds $10.9 billion. Fosters shares rose as much as 6.5 percent.

Investors likely face a weeks wait before they know who will form a national government and how independents will sway key policies like the mining tax and a planned broadband network.

There is the mining tax and the broadband issue but there are not too many economic differences, said Simon Burge at ATI Asset Management which oversees A$500 million. But with no party having a clear majority it makes it hard for them to get any of their mandates through.

YEN STRENGTH EYED

Japans benchmark Nikkei .N225 was down 0.4 percent adding to Fridays 2 percent fall as corporate performance jitters grew in the wake of the yens strength against the dollar.

Governments around the world are allowing their currencies to weaken, and if Japan doesnt do anything about the strength in the yen it could appreciate further and that would put pressure on Japanese stocks, said Masahiko Sato, an executive director at Nomura Securities equity marketing department.

Investors are focused on whether central bank Governor Masaaki Shirakawa and Prime Minister Naoto Kan will meet to discuss any official action in the face of the yens strength.

News that Kan and Shirakawa talked over the phone on Monday about the currency and the economy and agreed to work closely, which came during the mid-day break, was unlikely to have a big impact as it remained undecided whether the two will hold a meeting.

The dollar was down 0.3 percent at 85.35 yen. The U.S. currency fell as low as 84.72 yen earlier this month, its lowest since July 1995.

Investors expect Kan to pressure the central bank for action in the face of the yens strength, but Jiji news agency reported the government is considering postponing the meeting, which had been expected on Monday, to avoid giving the impression that it is intervening in the BOJs policy decisions.

Meanwhile, the doubts about the global economic recovery weighed on investor sentiment.

A growing trend seems to be that signs of a weak global economic recovery are prompting some funds to close, and cash-out moves as a result of that are weighing on stocks. That money is likely flowing into U.S. bonds and JGBs, said Hajime Nakajima, deputy general manager at Cosmo Securities.

The MSCI index of Asia Pacific ex-Japan stocks .MIAPJ0000PUS eked out gains, rising 0.3 percent and hauled up by advances in sectors such as resources .MIAPJMT00PUS and technology .MIAPJIT00PUS.

Oil rebounded to above $74 a barrel but stayed close to six week lows amid concerns about a global economic recovery.

Additional reporting by Aiko Hayashi in TOKYO; Editing by David Fox

Blackstone will back Great Eagles plan to develop more than 1,000 new homes in the north-eastern port city of Dalian, its first significant investment in China, the newspaper said on Monday, without citing sources.

The paper did not specify whether Hong Kong-headquartered Great Eagle Group or its Hong Kong-listed unit Great Eagle Holdings Ltd 0041.HK was involved in the deal.

Blackstone and Great Eagle executives were unavailable for comment.

Great Eagle Group posted a core profit after tax of about HK$1.276 billion $164 million and had a net asset value of around HK$22 billion in financial year 2009, according to its web site www.greateagle.com.hk.

Foreign companies have been trying to tap the Chinese housing market, which has seen prices rise sharply over the past year mainly due to healthy domestic consumption as the economy grew strongly and the country lacks investment products.

However, the government has been trying to curb rises, unveiling a slew of measures earlier this year and requiring banks to conduct stress tests to ensure the sector, a key pillar of the Chinese economy, does not suffer from overheating.

Reporting by Lee Chyen Yee and Megan Davis in New York; Editing by Jonathan Hopfner