* Purchase of stake over 40 pct needs regulatory approval
* Deal for 19.9 pct stake set to be completed within days
* Danamon shares surge 15 pct but below agreed price with Temasek (Recasts and writes through with MUFG comments)
JAKARTA, Dec 27 (Reuters) - Mitsubishi UFJ Financial Group (MUFG) said it was cautiously optimistic of gaining regulatory approval for its plans to take majority control of PT Bank Danamon Indonesia - a deal that sent shares in the Southeast Asian lender surging.
Japan's biggest lender, eager to expand its presence in Indonesia, has agreed with Temasek, Singapore's state investment arm, to buy 73.8 percent of the bank in three stages.
The first part of the acquisition - a purchase of a 19.9 percent stake worth $1.2 billion - is due to be completed within days. Eventually it aims to buy all the shares in the country's fifth-largest bank.
Any purchase of a stake of 40 percent or more will, however, exceed the maximum allowed by Indonesia's financial services regulator OJK, although the watchdog has the power to grant exceptions.
Takayoshi Futae, MUFG's chief executive for Asia and Oceania, told a news conference that the Japanese bank was in continuous discussions with OJK and was "cautiously optimistic" it would gain approval to take more than 40 percent. He did not elaborate further.
Danamon's shares jumped 15 percent in Wednesday trade to 6,900 rupiah per share. At one point they climbed as high as 7,000 rupiah - their highest level in more than 17 years - although that was still below the 8,323 rupiah per share agreed with Temasek.
The second phase of the acquisition - a purchase of 20.1 percent stake - is expected to be completed in the second or third quarter of 2018, MUFG said.
OJK has previously granted an exception to the 40 percent rule as part of its efforts to promote consolidation in the sector, allowing China Construction Bank Corp (CCB) to buying a controlling stake in PT Bank Windu Kentjana International in 2015 which then merged with another small domestic bank.
($1 = 13,558 rupiah) (Reporting by Cindy Silviana and Fransiska Nangoy; Editing by Edwina Gibbs)