India regulator questions United Spirits on Diageo talks

* No formal investigation yet-source

* SEBI checking price surge ahead of announcement

* Price movements caused by media speculation-spokesman

* Billionaire Mallya heads United, ailing Kingfisher Airlines

NEW DELHI/MUMBAI, Oct 11 (Reuters) - India's market regulator has written to billionaire Vijay Mallya's United Spirits Ltd "with a set of queries" after it recently announced it was in talks to sell a stake to Diageo Plc , a United spokesman said on Thursday, declining to specify the nature of the inquiry.

The queries from the Securities and Exchange Board of India (SEBI) come after shares in United Spirits surged 23 percent in the four days leading up the Sept. 25 announcement, jumping an additional 10 percent the day when the spirits maker disclosed the talks.

The Economic Times newspaper reported on Thursday SEBI was investigating stock price movements at UB Group companies to check whether securities laws had been broken, citing an unnamed senior regulatory official. UB Group controls India's dominant spirits maker as well as debt-laden Kingfisher Airlines .

"We look at a lot of companies based on market movement and seek management's comments, but there is no formal probe yet (on UB)," a source at SEBI told Reuters.

United Spirits shares have been volatile through the year due to widespread speculation about the company's on-again, off-again courtship with Diageo. The volatility has come as Mallya has scrambled to raise funds for his ailing Kingfisher Airlines.

"We have provided the information," said Prakash Mirpuri, a spokesman with Mallya's UB Group, referring to the requests from SEBI. Mirpuri declined to say if the investigations are linked to United Spirits' share price movement.

"The movement in share prices of our group companies has been largely influenced by the wide speculation by the media, with no comments from us," he said.

(Reporting by Anurag Kotoky and Himank Sharma; Editing by Rafael Nam and Matt Driskill)

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