UPDATE 1-LandSecs to JV with CWG on London office-sources

* LandSecs and Songbird's CWG to JV on Walkie Talkie-sources

* Deal allows CWG to keep foothold in recovering City market

* Songbird shrs reverse early losses, LandSecs up 1.7 pct

(Updates with share reaction, analysts quotes)

By Daryl Loo and Sinead Cruise

LONDON, Sept 3 (Reuters) - Land Securities (LAND.L) is set to bring in Songbird's (SBDE.L) Canary Wharf Group (CWG) as a partner to build a new skyscraper in London's City financial district, sources close to the deal said on Friday.

Land Securities, the UK's largest listed property company, is likely to announce the joint venture for the project at 20 Fenchurch Street, better known as the Walkie Talkie, later this month, the sources familiar with the deal told Reuters.

CWG, about 70 percent owned by Songbird, is expected to provide construction services to the joint venture, one source said, without providing the financial details.

"It looks to be a winning combination ... for CWG they can diversify from the Canary Wharf district, and for Land Secs they will be working with a developer that has one of the best construction records," JPMorgan analyst Harm Meijer said.

Execution Noble analyst Michael Burt said Land Secs would also benefit by spreading its risk on the speculative development -- that is, embarking on a new development without signing on pre-lets.

At 1515 GMT, Songbird's share price reversed an earlier loss of 0.7 percent to rise 0.7 percent, while Land Secs gained 1.7 percent, ahead of the 0.9 percent increase in the broader UK property stocks index .FTELUK.

Land Secs, Britain's largest commercial landlord with more than 29 million square feet of property, and Songbird, whose top shareholders include sovereign wealth funds Qatar Investment Authority and China Investment Corporation, declined to comment.

The deal will allow CWG to maintain a foothold in the City office market, which is seeing a revival in rents, after a joint venture that included CWG disposed of Drapers Garden last month.

The Drapers Garden project, which sold for 242.5 million pounds ($375 million) to private equity group Evans Randall, was CWG's last project in the City district. [ID:nLEE6JP000]

"Post-Drapers Garden completing, and given JPMorgan (JPM.N) isn't doing anything yet on the site they acquired in Canary Wharf, you could argue the deal will help Songbird to justify the development overheads in the business," Burt said.

U.S. banking giant JPMorgan has yet to decide if it will proceed with construction on the new $3 billion, 1.9 million square feet London headquarters, a reflection of wider concerns about stricter banking regulations. [ID:nLDE64K0NK]

The Walkie Talkie will comprise about 660,000 square feet of offices and 23,000 square feet of retail space, and has received planning permission with a targeted completion of 2014. In July, Land Secs said talks were progressing on a possible joint venture for the Rafael Vinoly designed building, without naming the party, as it restarts plans for new malls and offices in the rebounding UK property market. [ID:nLDE66K07V] (Reporting by Daryl Loo and Sinead Cruise; Editing by Andrew Macdonald) ($1=.6465 Pound) (See www.reutersrealestate.com for the global service for real estate professionals from Reuters)