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UPDATE 1-Kinder Morgan Canada shares sink on Trans Mountain halt

* Company said on Sunday halting most work on pipeline

* Shares in Canadian unit fall as much as 19 percent

* New York-listed parent gains

* (Adds Trudeau's response, KML CEO quotes, shares)

April 9 (Reuters) - Shares of Kinder Morgan Canada fell as much as 19 percent on Monday to their lowest since its stock exchange listing, a day after the company suspended most work on its C$7.4 billion expansion of the Trans Mountain pipeline.

Chief executive Steve Kean said on Sunday he would scrap plans to nearly triple the capacity of the pipeline, which carries crude from Alberta's oil sands to a facility in British Columbia, unless legal challenges are resolved by May 31.

The expansion, for which U.S.-listed Kinder Morgan had spun off a separate Canadian unit, had been approved by Prime Minister Justin Trudeau's government. Trudeau reiterated on Monday that the project "will be built."

The Trans Mountain, crucial new capacity to get Canada's oil to the West Coast and abroad, is opposed by British Columbia's government, many municipalities, some aboriginal groups and environmental activists concerned about possible oil spills.

"Actions initiated by British Columbia may not be the last," Kinder Morgan's CEO Steve Kean said on a call with analysts on Monday to address the issue.

He however, said the company's dividend won't be hit by the decision, and that Kinder Morgan was "by no way some kind of wounded duck."

New York-listed shares in Kinder Morgan rose 1.2 percent in response to the news. After falling by almost a fifth, Kinder Morgan Canada stock was trading down 10 percent.

Analysts wondered if the decision to halt work on Trans Mountain would have a spillover effect on other pipeline projects, many of which are already embroiled in similar problems.

"I am certainly not optimistic about the future of it because of ... historically what's going on here with pipeline development in the last decade," said Kelly Ogle, President of Canadian Global Affairs Institute.

Pipelines are crucial to Canada's oil-sands industry, which is being plagued by transportation bottlenecks.

"Rail lacks capacity.. the KXL (Keystone pipeline) is several years away at least, Energy East is not happening.. this is a sad state for oil transport and it's a giant resource that we are leaving behind," said Ogle. (Reporting by Nivedita Bhattacharjee; Editing by Arun Koyyur and Patrick Graham)