*

Perez signs two year extension

*

Horner emphasises continuity and stability

*

Move closes door to Sainz, Ricciardo

(Adds detail, quotes and background)

By Alan Baldwin

LONDON, June 4 (Reuters) - Mexican Sergio Perez will race for Red Bull until 2026 after signing a two-year extension to his contract, the Formula One champions announced on Tuesday.

Perez, 34, finished second overall to triple world champion team mate Max Verstappen last season -- the first time the team had landed a campaign one-two -- but is currently fifth after eight races.

The announcement ahead of the Canadian Grand Prix in Montreal this weekend silenced speculation about who would partner Verstappen next year.

It also ended Australian Daniel Ricciardo's hopes of returning to the senior team, after making a comeback with sister outfit RB, and closed another door to Ferrari's Carlos Sainz, who is looking for a seat for 2025.

Perez, who joined the team at the end of 2020, said racing for Red Bull was "a challenge like no other" both on and off the track.

"I am really happy to commit my future to this great team," said 'Checo'.

"I am delighted to be staying here to continue our journey together and contribute to this team's great history for two more years. Being part of the team is an immense challenge, and one I love.

"We have a great challenge this year and I have full trust in the whole team that the future is bright here and I am excited to be part of it."

Formula One's engine rules are changing in 2026, with Red Bull building their own powertrain and starting a new partnership with Ford.

Red Bull enjoyed the most dominant season in the sport's history last year, winning 21 of 22 races and Verstappen triumphant in 19.

Verstappen has so far won five races this year but Red Bull have been embroiled in controversy with team boss Christian Horner cleared of allegations of misconduct, which he denied, towards a female employee.

Horner has also faced opposition from Verstappen's father Jos, who said in March that Red Bull would 'explode' if the boss stayed, while divisions have emerged among the team's shareholders.

Star designer

Adrian Newey

also announced last month that he would be leaving next year.

"Now is an important time to confirm our line-up for 2025 and we are very pleased to continue working together with Checo," said Horner, who stressed the importance of continuity and stability.

"The past few races have been tough, there is convergence on the grid, but we are confident in Checo and look forward to his return to proven form and performance, that we so often see," added Horner.

"Last year was a unicorn season and we will need to work hard to retain our titles, but we are assured in our line up and with the team as a whole, which is imperative in what is shaping up to be a close fought championship this year."

Perez, winner of six races in his F1 career, has so far finished second three times this season and third in China. He crashed out of the last race in Monaco.