By Nicole Mordant

VANCOUVER, British Columbia (Reuters) - A stake in troubled bank National City Corp (NCC.N: Quote, Profile, Research) could be a shrewd and cheap way to give Bank of Nova Scotia (BNS.TO: Quote, Profile, Research) its first foothold in U.S. retail banking, analysts said on Friday.

The Wall Street Journal reported late on Thursday that Canada's second biggest bank has jumped into the bidding for National City, which is under regulatory pressure to bolster its capital, or find a buyer, before reporting quarterly results this month.

Scotiabank spokesman Frank Switzer said the Toronto-based bank doesn't comment on rumor or speculation.

But analysts said the report was likely true, even though Scotiabank's strategy for expanding its retail banking operations internationally has excluded the United States in favor of countries in Latin America and the Caribbean.

"It is a little off strategy for Scotiabank to be looking at National City. But Scotia has also said if they do go into the United States it will likely be by buying into a distressed asset," said CIBC analyst Darko Mihelic.

"Scotia buys stuff all over the world at distressed prices and their due diligence is extremely strong. Taken together, I would be supportive of a deal, as long as the price is right," Mihelic told Reuters.

Shares of Scotiabank fell harder than those of its peers on the Toronto Stock Exchange, closing down C$1.21, or 2.6 percent, at C$45.52 on Friday, amid a broad selloff.

The Wall Street Journal said Scotiabank, which has a market value of about C$46 billion ($45 billion), is eyeing at least a stake in National City.