UPDATE 1-Australian regulator clears Unibail-Westfield deal

(Adds background on deal)

March 29 (Reuters) - Australia's Foreign Investment Review Board has approved Unibail-Rodamco's proposed $16 billion buy-out of shopping mall giant Westfield Corp, the companies said on Thursday.

Europe's biggest property firm in December offered to buy Westfield in a defensive move to create a global leader in a sector grappling with the online shopping challenge led by Amazon.

Westfield last month ruled out plans to increase the value of the buy-out after a decline in the European firm's shares drove down the deal's value.

Westfield, owner of World Trade Center in New York, Westfield London and other high profile shopping centres, recommended the takeover in December.

Boards of both companies reiterated their support for the deal in Thursday's statement, with the parties adding that the transaction was subject to the approval of shareholders and other customary conditions. (Reporting by Chris Thomas in Bengaluru; Editing by Nick Macfie)