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UPDATE 3-Bombardier should consider rail deal with China's CRRC -Caisse CEO

* Caisse CEO says every opportunity should be looked at

* Says doesn't see reason to sell the business

* Says tie-up with Siemens/Alstom would be difficult (Adds comments on Bombardier/Airbus deal)

TORONTO, Nov 1 (Reuters) - Bombardier Inc should look at all options for its transportation business including partnering with China's state-owned CRRC, one of Bombardier's biggest shareholders said on Wednesday.

"I think we have to look at everything. Every opportunity that comes up ought to be looked at," Caisse de depot et placement du Quebec Chief Executive Officer Michael Sabia told reporters when asked about a deal with CRRC.

Germany's Siemens and France's Alstom said they are merging their train manufacturing operations in September. The move will leave Bombardier competing in a market dominated by CRRC, the world's largest train maker, and a combined Siemens and Alstom group as the second biggest.

Sabia said Bombardier should consider a partnership with CRRC rather than selling the business to the Chinese.

"I think the transportation business is a long-run asset of Bombardier. I don't see an opportunity or reason to go down the sale path," he said.

French Finance Minister Bruno Le Maire has said that the combination of Siemens and Alstom could be expanded to include Bombardier and create a business capable of competing with CRRC but Sabia said such a combination would be difficult.

"A three-party dance is a complicated dance. It's hard not to step on people's toes," he said.

"If a door opened and there were an interesting transaction to be done, would we have any objections in principle? No. But those are very difficult to get done."

The Caisse, which invests on behalf of workers and retirees in the Canadian province of Quebec, took a 30 percent stake in Bombardier's money-generating rail division in November 2015.

Sabia welcomed an agreement last month for Airbus to take a majority stake in Bombardier's CSeries jetliner programme, securing the plane's future and giving the Canadian firm a possible way out of a damaging trade dispute with Boeing in the U.S. market.

"I think the Airbus transaction was a very positive step. I think it does stabilize the company and I think it gives it a much more powerful platform to continue the development of the CSeries," he said.

The deal , however, will see Bombardier lose control of a project it developed at a cost of $6 billion.

"The sales machine that is Airbus is something that's very important in giving that aircraft access to the markets that it needs to have in order for it to be a big commercial success," Sabia said. (Reporting by Matt Scuffham; Editing by Steve Orlofsky and Sandra Maler)