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India regulator questions United Spirits on Diageo talks

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* No formal investigation yet-source

* SEBI checking price surge ahead of announcement

* Price movements caused by media speculation-spokesman

* Billionaire Mallya heads United, ailing KingfisherAirlines

NEW DELHI/MUMBAI, Oct 11 (Reuters) - India's marketregulator has written to billionaire Vijay Mallya's UnitedSpirits Ltd "with a set of queries" after it recentlyannounced it was in talks to sell a stake to Diageo Plc ,a United spokesman said on Thursday, declining to specify thenature of the inquiry.

The queries from the Securities and Exchange Board of India(SEBI) come after shares in United Spirits surged 23 percent inthe four days leading up the Sept. 25 announcement, jumping anadditional 10 percent the day when the spirits maker disclosedthe talks.

The Economic Times newspaper reported on Thursday SEBI wasinvestigating stock price movements at UB Group companies tocheck whether securities laws had been broken, citing an unnamedsenior regulatory official. UB Group controls India's dominantspirits maker as well as debt-laden Kingfisher Airlines.

"We look at a lot of companies based on market movement andseek management's comments, but there is no formal probe yet (onUB)," a source at SEBI told Reuters.

United Spirits shares have been volatile through the yeardue to widespread speculation about the company's on-again,off-again courtship with Diageo. The volatility has come asMallya has scrambled to raise funds for his ailing KingfisherAirlines.

"We have provided the information," said Prakash Mirpuri, aspokesman with Mallya's UB Group, referring to the requests fromSEBI. Mirpuri declined to say if the investigations are linkedto United Spirits' share price movement.

"The movement in share prices of our group companies hasbeen largely influenced by the wide speculation by the media,with no comments from us," he said.

(Reporting by Anurag Kotoky and Himank Sharma; Editing byRafael Nam and Matt Driskill)

((anurag.kotoky@thomsonreuters.com)(+91 11 4178 1024)(ReutersMessaging: anurag.kotoky.thomsonreuters.com@reuters.net))

Keywords: UBGROUP REGULATOR/PROBE