Genting HK seeking shares in Australia's Echo - fund manager

* Genting Group subsidiary eyeing Echo's Sydney casino

* "Definite" interest, but not at price offered-fund manager

* Echo shares rally 3 percent on news buyer interested

MELBOURNE, Oct 5 (Reuters) - An unnamed buyer believed to be Genting Hong Kong Ltd (GHK) has approached Australian shareholders in Echo Entertainment Group Ltd seeking to buy shares, a fund manager said on Friday.

Genting Hong Kong and Genting Singapore PLC , which are subsidiaries of Malaysian gambling giant Genting Group Bhd , each bought almost 5 percent of Echo in June.

Genting Group, controlled by its chairman, Lim Kok Thay, has built a war chest of S$3.9 billion ($3 billion), leading to speculation it may be preparing for an acquisition potentially pitting it in a takeover battle against Australian billionaire James Packer.

The two arms of Genting and Packer's Crown Ltd have been circling Echo, the owner of Sydney's only casino, which attracts scores of Asian highrollers. But in a surprise move, Genting Singapore sold its 4.8 percent stake in Echo last month in a $165 million deal, saying it wanted to "rationalize its investments portfolio".

Newspapers on Friday reported that a buyer, believed to be Genting Hong Kong, was seeking 40 million Echo shares, or 5 percent of the Australian casino operator.

"There is definite interest to buy Echo shares, but at the wrong price," a fund manager told Reuters, speaking on condition of anonymity because the matter is confidential.

The fund manager said it was widely speculated that the Hong Kong arm of the Genting Group was the buyer and wanted to lift its stake in Echo to 10 percent.

The fund manager said his firm was not interested in selling shares at the offered price on Thursday night of A$3.90.

Echo shares rallied 3 percent on Friday to A$3.965, on active turnover of 8.5 million shares or 1.5 times an average day. But there was no indication that any trade approaching 40 million shares had been made.

A second person with direct knowledge said the broker seeking to buy Echo shares was RBS Morgans. A spokesman for RBS Morgans declined to comment.

Last month, Genting Hong Kong said it intended to hold its investment in Echo and remained committed to an application for regulatory approval to acquire more than 10 percent of the casino group.

Reports have said the Hong Kong arm would not have been able to buy the Singapore arm's 4.8 percent stake in Echo for fear of falling afoul of Hong Kong Stock exchange rules on related-party transactions.

A spokeswoman for Genting in Australia declined to comment. Officials with Genting Hong Kong also declined to comment.

(Reporting by Victoria Thieberger; Additional reporting by Farah Master in HONG KONG; Editing by Matt Driskill)

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