UPDATE 1-Commerzbank, Dresdner make merger headway -sources

(Adds detail, background, shares)

By Philipp Halstrick and Patricia Nann

FRANKFURT, July 1 (Reuters) - Commerzbank AG (CBKG.DE) and Dresdner Bank have moved into "very intensive" due diligence that could lead to concrete merger talks within a few weeks, sources familiar with the situation told Reuters on Tuesday.

"The way the process has picked up speed shows how quickly they may move into detailed negotiations," said one of the sources.

Teams from both banks were holding intensive discussions almost daily on the valuation of each other's assets, the source added.

Commerzbank and Dresdner parent Allianz SE (ALVG.DE) declined to comment.

The chances that Commerzbank and Dresdner would field a joint bid for Deutsche Postbank AG (DPBGn.DE), creating a three-way merger, were becoming increasingly unlikely, the sources said.

"The focus now is much more on Munich and Frankfurt than Bonn," said one source, referring to the cities where Allianz, Commerzbank and Postbank are based.

However, the source left open the possibility that Commerzbank and Dresdner could bid for Postbank, Germany's biggest retail bank with 15 million customers, at a later date.