*

Deadline looms for exclusive talks to sell 43 CK Hutchison ( CKHUF )

ports

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Ports deal talks include two along Panama Canal

*

Sunday deadline likely to be extended, sources say

*

Deal has become increasingly politicised amid US-China

trade war

(Adds White House official's comment in paragraphs 17-18)

By Clare Jim, Scott Murdoch and Davide Barbuscia

HONG KONG, July 25 (Reuters) - CK Hutchison's ( CKHUF )

plan to sell most of its $22.8 billion ports business is

unlikely to be finalised anytime soon, with political

brinkmanship set to continue, and sources saying that a Sunday

deadline for exclusive talks was likely to be extended.

The Hong Kong conglomerate's plan to sell the business,

which would include two ports along the strategically important

Panama Canal, to a consortium led by BlackRock ( BLK ) and

Italian billionaire Gianluigi Aponte's family-run shipping

company MSC, has become politicised amid an escalating

China-U.S. trade war.

Negotiations for the deal, which covers 43 ports in 23

countries, are on an exclusive basis between CK Hutchison ( CKHUF ),

controlled by Hong Kong tycoon Li Ka-shing, and the consortium

for 145 days until Sunday, according to the terms announced in

March.

The deal talks, however, are unlikely to collapse if the two

parties do not ink a pact by Sunday, with three people close to

the ports-to-telecoms conglomerate saying the parties could

extend the deadline to continue exclusive negotiations.

The first part of the deal - definitive documentation to

sell two port operations near the Panama Canal - was also not

signed by an April 2 deadline set in the sales announcement.

The people declined to be named due to the sensitivity of

the matter.

BlackRock ( BLK ) declined to comment. CK Hutchison ( CKHUF ) and MSC

Mediterranean Shipping Company, which CK Hutchison ( CKHUF ) said in May

was the main investor in the consortium, did not respond to

requests for comment.

U.S. President Donald Trump hailed the deal as "reclaiming"

the Panama Canal, after his administration previously called for

the removal of what it said was Chinese ownership of the ports

near the canal.

But in April, China's top market regulator said that it was

paying close attention to CK Hutchison's ( CKHUF ) planned sale and that

parties to the deal should not try to avoid an antitrust review.

Beijing's stance on the planned deal was made public after

pro-China media launched a stinging criticism, saying China had

significant national interests in the transaction and it would

be a betrayal of the country.

"I think at this moment it's not very optimistic that they

can directly sell the ports to the consortium," said Jackson

Chan, global fixed income senior manager at FSMOne Hong Kong,

which has clients holding CK Hutchison ( CKHUF ) bonds.

"The market has already digested the news, even if it

announces next week that it won't sell anymore, I don't think

it'll be a shock because the market understands it wouldn't have

a large impact on its operations."

DEAL RISKS

CK Hutchison ( CKHUF ) shares, which jumped 33% the following two days

after the deal was announced in early March, erased all of the

gains by mid-April. But since then it regained lost ground along

with the rise in the broader Hong Kong market index.

The outlook for the deal has been clouded further in recent

days, with a separate source telling Reuters that Chinese ports

operator China Cosco Shipping Corp (COSCO) was also looking to

join the consortium to buy the ports business.

COSCO is requesting veto rights or equivalent power in the

entity that will take over 43 ports from CK Hutchison ( CKHUF ), Bloomberg

News reported this week, citing people familiar with the matter.

COSCO did not respond to a request for comment.

Responding to Reuters' emailed queries on the deal

prospects and possible involvement of COSCO in the consortium, a

White House official said: "As the president said, we didn't

give it to China. We gave it to Panama, and we're taking it

back."

The official did not elaborate.

The existing consortium would likely allow COSCO into the

deal, said Cathy Seifert, an analyst at CFRA Research.

"The bigger risk to the deal being consummated, in my

opinion, is likely the Trump administration, which is likely to

block a deal that would include China," said the New

Jersey-based analyst who tracks BlackRock ( BLK ).

Ballingal Investment Advisors strategist David

Blennerhassett, who publishes on the independent online research

platform Smartkarma, said the addition of COSCO in the

consortium was likely to enrage Trump.

"Trump, who has a handful of issues already on his plate,

would be incandescent," he said.