Dexia set for capital increase

BRUSSELS, Sept 30 (Reuters) - Belgian-French financial services group Dexia (DEXI.BR)(DEXI.PA) was set to announce a capital increase involving key stakeholders and the Belgian state of up to 7 billion euros ($10.04 billion) on Tuesday.

The move comes a day after three governments bailed out its rival Fortis (FOR.BR) in the biggest European bank rescue since the onset of the credit crisis which has shredded bank valuations.

Belgian and French media reported that Dexia was looking to boost its balance sheet by 7 billion euros, a figure mentioned by Brussels regional premier Charles Picque as he entered talks with Prime Minister Yves Leterme late on Monday.

The prime minister's spokesman later said that the figure would be lower than 7 billion.

Dexia declined to comment after the end of a conference call of board members on Monday evening, following a similar call on Sunday.

Leterme told a briefing on Monday evening that Belgium's regional governments had agreed in principle to strengthen Dexia's balance sheet.

Leterme was due to meet core cabinet members later on Monday before thrashing out final details with Belgian stakeholders.

Dexia has a core of shareholders holding 51.9 percent of the company, including French state Caisse des Depots (CDC) with 11.7 percent and Belgium's communal holding group with 16.2 percent.

Luxembourg Budget and Treasury Minister Luc Frieden and a representative from France also arrived for talks into the early hours of Tuesday.

Dexia's shares (DEXI.BR) in Brussels ended off 29.7 percent at 7.07 euros on Monday, having hit a 12-year low of 6.75 euros, and its market value fell by some 4 billion euros to 8 billion. (Reporting by Philip Blenkinsop; Editing by David Cowell)