UPDATE 3-Friends invites Resolution to merger talks

* Friends proposes buying Resolution and seeking more deals

* Structure of proposed merged company key obstacle to deal

* Friends shares down 0.7 pct, Resolution up 4.2 pct

(Adds further details) By Myles Neligan

LONDON, July 17 (Reuters) - UK life insurer Friends Provident FP.L unveiled an outline deal to join forces with financial sector buyout firm Resolution (RSL.L), triggering fresh talks between the pair just four days after Resolution's initial takeover plan went sour.

Resolution said on Friday it would enter discussions over Friends' proposal, under which the insurer would buy Resolution, creating a new takeover vehicle devoted to consolidating the UK life insurance sector.

Friends' shares closed 0.7 percent lower at 71 pence, while Resolution's shares rose 4.2 percent to 91.5 pence.

On Monday Friends had rejected an all-share takeover approach from Resolution as too low, and also expressed reservations about the buyout firm's corporate structure, which it described as "significantly different from recognised public company best practice." [ID:nLD542208]