CORRECTED - UPDATE 1-Turkey, Georgia, Azerbaijan launch joint rail link

(Corrects currency of bid to lira from dollars in paragraphs two and seven) (Adds quotes, details)

By Hatice Aydogdu

KARS, Turkey, July 24 (Reuters) - Leaders of Turkey, Georgia and Azerbaijan launched a railway project between the three countries on Thursday, building on links forged by gas and oil pipelines.

At a railway station in the eastern Turkish border town of Kars the presidents of the three countries held a ground breaking ceremony for the 290 million lira ($241.06 million) Turkish section of the railway.

The three are linked by the BP-led (BP.L) Baku-Ceyhan oil pipeline and the Baku-Tbilisi-Erzurum gas line but trade links between Turkey and the Caucasus region are limited.

Turkish President Abdullah Gul, Georgia's Mikheil Saakashvili and Azerbaijan's Ilham Aliyev placed three sections of railway track on a large map of the region in a symbolic launch of the project as confetti showered down.

"With this project the historic Silk Road is being reinvigorated," Gul said in a speech.

"The project is open to all countries in the region who want to contribute to good neighbourly relations, peace and prosperity," he said.

Ozgun Yapi-Celikler joint venture won the tender last September for construction of the 76-km (47-mile) Turkish stretch of the railway with a bid of 289.8 million lira, the lowest of 14 bids.

The project involves new track construction and renewal of existing track, and is expected to be completed in 2011. Work on the 29-km (18 miles) stretch in Georgia was launched last year.

The 160-km (99-mile) section of rail in Azerbaijan will be renewed.

"Thanks to this project we will not just be a part of Europe, we will become a solid bridge between Europe and Asia," Saakashvili said.

Turkish Transport Minister Binali Yildirim said the railway links from the region will extend into Europe with completion of an ongoing rail tunnel project linking the European and Asian sides of Turkey's biggest city, Istanbul.

In its first year of operation the Baku-Kars railway will carry one million passengers and 6.5 million tonnes of freight, Yildirim said.

The medium term annual target was three million passengers and 18 million tonnes of freight. (Writing by Daren Butler; Editing by Mariam Karouny)