Co-op and Somerfield seen working on deal

LONDON (Reuters) - The Co-operative Group, Britain's biggest mutually owned retailer, is still in talks to buy Somerfield but reports that an agreed deal was imminent were premature, sources close to the matter said on Wednesday.

If the acquisition is agreed the Co-op is likely to pay less than 1.7 billion pounds, one of the people said.

Supermarket chain Somerfield is being sold by its owners private equity firm Apax, Barclays Capital, a unit of Barclays (BARC.L), and property magnate Robert Tchenguiz.

(Reporting by Eleanor Wason; Editing by Quentin Bryar)