UPDATE 2-Suez Env. reference price set at 14 euros/share

(Adds reference share price, market cap)

By Marie Maitre

PARIS, July 21 (Reuters) - Suez Environnement (SEVI.PA: Quote, Profile, Research), a water and waste company to be separated from newly merged energy giant Suez GDF, will start trading on the stock market on Tuesday at a reference price of 14 euros per share.

This implies a market capitalisation of 6.86 billion euros ($10.9 billion) for a water company that rivals industry giant Veolia (VIE.PA: Quote, Profile, Research), according to Reuters calculations.

This is also at the bottom end of an estimate range of between 14 euros and 20 euros given by Suez Environnement Chief Executive Jean-Louis Chaussade earlier on Monday.

Suez Environnement's stock and shares of GDF Suez are due to start trading on the Paris and Brussels markets at 0700 GMT, marking the final chapter of a merger engineered by the French government at the start of 2006.

Suez Environnement combines what were core activities for Suez and the Lyonnaise des Eaux company, with which it merged in 1997 after selling its Indosuez banking unit.

Its parent company Suez (LYOE.PA: Quote, Profile, Research), whose name goes back to the building and financing of the Suez Canal by Ferdinand de Lesseps from 1859, will merge its electricity business with Gaz de France's gas assets.

The new group will keep 35 percent of Suez Environnement, while the remaining 65 percent will be distributed to Suez shareholders, with each Suez shareholder receiving one Suez Environnement share for every four Suez shares they own.