UPDATE 1-Continental rises on private equity bid talk

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LONDON/FRANKFURT, June 25 (Reuters) - Shares in German automotive supplier Continental AG (CONG.DE) rose more than 7 percent on Wednesday on renewed market talk of private equity bid interest, traders said.

"There is a rumour that a financial investor has cast an eye on Continental," one trader said. Continental declined to comment.

Its shares were up 7.1 percent at 65.80 euros at 1444 GMT, the second-biggest gainer on Germany's DAX .GDAXI, which was up 1.1 percent.

Continental became one of the top five global automotive suppliers last year by acquiring Siemens's VDO auto electronics unit for 11.4 billion euros ($17.8 billion), a deal that doubled its size.

It now has a market capitalisation of around 10.6 billion euros and trades at around 7.4 times 2009 estimated earnings per share, according to Reuters Estimates, a premium to tyremaker rival Michelin's (MICP.PA) 6.8 times.

Private equity outfits General Capital Group, Permira [PERM.UL], Goldman Sachs, Kohlberg Kravis Roberts [KKR.UL] and Bain Capital joined forces in 2006 to examine a bid for Continental but talks with management ended by mutual agreement.

The stock hit 94.11 euros when Continental first revealed in September of that year that it had held talks with unnamed private equity investors.

Chief Executive Manfred Wennemer has said in the past he would not oppose a private equity bid in principle so long as the group's strategy was maintained, its holdings were not broken up for sale and its balance sheet remained strong enough that it could continue to use cash to invest in growth and not to pay down buyout-related debt. (Reporting by Sitaraman Shankar in London, Stefan Schaaf and Michael Shields in Frankfurt and Blaise Robinson in Paris) (michael.shields@thomsonreuters.com, Reuters Messaging: michael.shields.reuters.com@reuters.net; +49 69 7565 1266)) ($1=.6419 Euro)