Suez says talks with British Energy have ended

LONDON (Reuters) - French utility Suez SA has ended talks over a possible offer for British Energy Group Plc, dealing a blow to the UK government's hopes of ensuring competition in building new nuclear power plants.

Suez, which is merging with Gaz de France, is one of three parties which sources familiar with the matter told Reuters last week had expressed interest in British Energy.

Electricite de France has made a bid proposal of under 700 pence a share, or below 11 billion pounds, while Germany's RWE AG and Spain's Iberdrola have expressed an interest in making a joint bid, the sources said at that time.

"As previously indicated, the completion of the merger with Gaz de France remains Suez's key priority," Suez said in a brief statement on Friday.

"Accordingly, Suez confirms that, in its discussions regarding the future development of the nuclear energy sector in the UK, those relating to a potential offer for British Energy have now ceased."

As a result of this stance, Suez said UK takeover rules would prevent it from resuming talks over a possible offer for British Energy until it had completed its merger with Gaz de France.

British Energy is the UK's biggest electricity producer and is at the heart of the government's plans to expand nuclear power, as it seeks to reduce its reliance on imported energy and reduce carbon emissions.

The company runs eight of Britain's 10 nuclear power stations, but all except one are scheduled to close by 2023.

Lacking the expertise to build new plants itself, British Energy is hoping to forge partnerships with companies that would carry out the construction on its land.

(Reporting by Mark Potter; Editing by Dan Lalor and David Holmes)