UPDATE 1-German prosecutors search Blackrock's offices in dividend-stripping probe -source

probe -source@

* Prosecutors search Blackrock's Munich offices - source

* Spokesman says Blackrock cooperating with investigation (Adds detail, background)

FRANKFURT, Nov 6 (Reuters) - German prosecutors searched the Munich offices of fund investor Blackrock on Tuesday as part of a probe into dividend stripping trades, a person with knowledge of the matter told Reuters, as the country's largest post-war fraud investigation widened.

The search came as Germany's finance minister urged European peers to tighten cooperation against abusive tax schemes, after Reuters and other media revealed sham trading deals that cost taxpayers billions of euros.

A spokesman for Blackrock said the company was "fully cooperating with an ongoing investigation relating to cum ex transactions in the period 2007-2011". State prosecutors in Cologne declined to comment.

The practice being investigated typically involved trading company shares rapidly around a syndicate of banks, investors and hedge funds to create the impression of numerous owners - each entitled to a tax rebate.

Numerous banks and investors were involved. It is unclear what role Blackrock played.

Danish tax authorities say they lost $2 billion, while Germany estimates it was tricked out of more than 5 billion euros ($5.71 billion) by a similar "cum-ex" method. Other countries, including Austria and Belgium, were also hit.

German prosecutors believe the players in the cum-ex scheme misled the state into thinking a stock had multiple owners on its dividend payday who were each owed a dividend and a dividend tax credit. ($1 = 0.8760 euros) (Additional reporting by Douglas Busvine; Editing by Maria Sheahan)