Buyers circle for BAA's Gatwick, Stansted - paper

LONDON, April 20 (Reuters) - Bankers have held talks with potential buyers of London's Gatwick and Stansted airports before a UK competition watchdog report which could lead to a break-up of airport operator BAA, the Mail on Sunday reported.

BAA, owned by Spain's Ferrovial (FER.MC), owns Britain's seven biggest airports, including London Heathrow.

A report due this week from the Competition Commission is expected to support an Office of Fair Trading recommendation for a full investigation, which could ultimately recommend that Ferrovial sell at least one of its London airports.

The paper, citing no sources, said investment bankers had held talks with unnamed interested parties from India and the Middle East as well as Singapore state investor Temasek [TEM.UL].

A spokesman for BAA declined to comment on the report.

The Sunday Telegraph separately reported that retailers operating from Heathrow's Terminal 5, whose opening last month was marred by chaos, lost luggage and cancelled flights, were demanding rent reductions from BAA.

The paper said the disruption meant sales fell well below budget and retailers now fear delays in transferring long-haul flights to the new terminal could damage sales further. (Reporting by Clara Ferreira-Marques; Editing by Quentin Bryar)