UPDATE 1-Polish builder eyes merger to fix money woes - paper

* PBG CEO mulls merger between "several vital entities"

* Says state agency ARP should be involved

* No comment on whether merger could be with rival Polimex

(Adds comments, background)

WARSAW, Oct 9 (Reuters) - Troubled Polish builder PBG

believes mergers within the construction sector couldbe a way of fixing its financial problems, a newspaper reportedon Tuesday.

PBG has been in bankruptcy protection since a series ofcontracts linked to the Euro 2012 soccer tournament went sour,and the Dziennik Gazeta Prawna quoted its chief executive,Wieslaw Rozacki, as saying a merger could be a solution.

The merger being considered would be between "several vitalentities for the Polish economy," the newspaper quoted Rozackias saying.

Rozacki added that state development agency ARP should beinvolved in the project, but declined to comment on whether itwould also include PBG's beleaguered rival Polimex , inwhich ARP is to buy a stake of up to 33 percent.

ARP declined to comment, Polimex was not available, while asource close to PBG said the merger option was not an immediateprospect.

"PBG is in constant talks with ARP over some form of aid,"the source said on a condition of anonymity.

"Polimex does not currently have a big shareholder and ifARP became one, a tie-up option with PBG could be in the works,but this is further down the line."

Earlier this year, sources told Reuters that PBG andPolimex, which run similar construction portfolios, mighteventually merge to avoid bankruptcy.

The two are the largest of Polish construction groups to runinto trouble after cut-throat bidding in Poland'smotorway-building programme ahead of the Euro 2012 soccertournament which Poland co-hosted, left builders deeply in debt.

PBG has been in bankruptcy protection since June, whilePolimex is struggling to keep afloat. It plans to spin offnon-core units and secure a debt restructuring deal, as well asshareholder acceptance for a share issue.

Both companies opened the Tuesday session on the Warsawbourse with gains of around 2 percent, but PBG's shares arestill almost 91 percent down this year to date, with Polimexstock down by 54 percent.

(Reporting by Adrian Krajewski; Additional reporting byAgnieszka Barteczko; Editing by Mark Potter)

((adrian.krajewski@thomsonreuters.com)(+48 22 653 9709)(Reuters Messaging:adrian.krajewski.thomsonreuters.com@reuters.net))