LONDON (Reuters) - ING Real Estate, the world's biggest property fund manager, is not interested in bidding for Spanish property firm Colonial (COL.MC: Quote, Profile, Research), after a report suggesting the contrary, a source familiar with the matter said on Thursday.

Spanish newspaper La Gaceta de los Negocios on Thursday quoted market sources as saying the real estate arm of U.S. conglomerate General Electric (GE.N: Quote, Profile, Research) had sounded out Dutch financial group ING (ING.AS: Quote, Profile, Research) about a joint bid for Colonial.

The paper said the two could be finalising an agreement.

Shares in the trouble Spanish firm were 0.58 percent higher at 1.73 euros by 1540 GMT, bucking a weaker trend in European property shares .FTENEUR but underperforming a 1.16 percent gain in the broader Spanish stock market .IBEX.

(See www.reutersrealestate.com for the global service for real estate professionals from Reuters)

(Reporting by William Kemble-Diaz; Additional reporting by Ben Harding in Madrid; Editing by Quentin Bryar)