UPDATE 1- Kuwait's KIA to triple Japan investments -KUNA

(Adds details, background)

KUWAIT Aug 3 (Reuters) - Kuwait Investment Authority (KIA), the Gulf state's sovereign wealth fund, plans to as much as triple investments in Japan to $48 billion, state news agency KUNA quoted the finance minister as saying on Sunday.

Kuwait invests about $15 billion to $16 billion in Japan, KUNA reported Mustapha al-Shamali, touring Asia with Kuwaiti Prime Minister Sheikh Nasser al-Mohammad al-Sabah, as saying.

"KIA has an intention to double or triple its investment in the Japanese market."

The increased investments would follow an agreement to avoid double taxation between the two countries, which would help strengthen investment flows, Shamali said.

Both countries had agreed in principle to sign the taxation deal, he added, without saying when a final deal would be reached.

KIA was looking at investments in Japan's real estate sector and stock market, as well as other direct investments after having focussed on stocks and bonds in the Asian country, Shamali said, without giving details. Shamali said last month, KIA, which manages the Gulf Arab state's massive oil generated-assets, was intending to boost investments in Asia with a focus on Japan, India and China.

A KIA spokesman was not immediately available for comment.

Gulf Arab states and companies, buoyed by record oil prices, spent about $60 billion on foreign assets last year, almost double the previous two years combined. In 2006, KIA Managing Director Bader al-Saad said KIA's board had decided in 2005 to lift its Asia investments to 20 percent from 10 percent. No new target has been published since then.

DAIMLER COOPERATION

The wealth fund was also studying how to enhance its partnerships with European firms expanding into China, including German carmaker Daimler (DAIGn.DE), Shamali said, without giving details on the nature of the partnership.

KIA owns 7.6 percent of Daimler, according to the carmaker's website.

KIA is also studying investment opportunities in South Korea, Shamali said. "We are exploring all attractive opportunities there and have not pinpointed any specific sectors yet," he added.

KIA is considering investing in the financial industry and might consider raising its stakes in U.S. banks Citigroup (C.N) and Merrill Lynch MER.N if a good opportunity came up, KIA's Saad told Reuters in June.

KIA was managing at least 72 billion dinars ($271.4 billion) of assets in the country's Future Generation Fund, a nest egg for when oil runs out, in the year to March 31, Shamali said last month. Shamali told KUNA Kuwait would welcome Japanese investments in sectors such as oil after Japan's JGC Corp (1963.T) won with South Korea's GS Engineering and Construction Corp (006360.KS) a package worth $4 billion to help build Kuwait's giant Al-Zour refinery.

Japan is a main buyer of Kuwaiti oil.