UPDATE 2-Ambani brothers truce seen unlikely; hurdles remain

* Court battle over gas supply to not be affected

* Govt could push brothers to resolve row

* Rise in shares seen as knee-jerk reaction

* Govt: dispute put off investors during latest auction (Adds details, results of oil and gas block auction, background, closing prices)

By Pratish Narayanan

MUMBAI, Oct 12 (Reuters) - Indian billionaire Anil Ambani's call to end a bitter feud with his elder brother Mukesh over the split of the Reliance business empire is unlikely to lead to a quick resolution before a hearing in a feud over gas supplies.

Shares in firms controlled by the brothers rose on Monday, on hopes for a resolution after Anil Ambani on Sunday made an impassioned call to end the impasse, but analysts said the gains may be short lived.

"The rise is just a knee-jerk reaction to Anil's comments yesterday," said Alex Mathews, head of research at Geojit BNP-Paribas Financial Services.

The Reliance empire, which spans energy, telecommunications and financial services, was split between the brothers in 2005 following the death of their father, Dhirubhai Ambani, a legendary Indian business tycoon who built Reliance from scratch.

The siblings have since been involved in several disputes, the latest over a deal for Mukesh Ambani's Reliance Industries (RELI.BO: Quote, Profile, Research) to sell gas to Anil Ambani's Reliance Natural Resources (RENR.BO: Quote, Profile, Research) at below-market rates as agreed in a 2005 family settlement brokered by their mother, Kokilaben.

The dispute has drawn in the government, which can decide who can buy gas and at what price, and sparked widespread public debate on the role of powerful business families that dominate Asia's third-largest economy.

Analysts say the government could push the brothers to resolve the dispute on concerns possible government intervention in gas pricing and sales could scare off investors and raise investment risk to a politically sensitive resource. [ID:nBOM453401]

"There will be pressure from the government for the brothers to patch up. Everyone wants to see an end to this as over the next few years it could escalate to many sectors," said Sonam Udasi, vice president at BRICS Securities.

The dispute flared in the midst of the largest-ever sale of India's oil and gas exploration rights. The latest auction of exploration blocks evoked a tepid response as the global economic slump and the Ambani dispute put off investors. [ID:nDEL481108]

WAR OF WORDS

The row between the brothers has led to a near-daily exchange of words, with Anil Ambani taking a series of front-page advertisements in major newspapers accusing India's Petroleum Ministry of taking the side of Reliance Industries.

Following a visit to holy shrines in the Himalayas, Anil Ambani offered an olive branch on Sunday. Reliance Industries welcomed the move, but said the dispute under litigation was not merely a family matter and hoped "any overtures for rapprochement are in no way related to the ongoing hearing of the case".

"The body language does not suggest the issue will be resolved any time soon," BRICS' Udasi said. "I don't think anyone is looking for an out-of-court settlement."

The country's highest court is set to hear the case over gas supplies on Oct. 20. The government has lodged a petition with the Supreme Court to intervene in the gas-supply case, arguing the natural resource is its property. The court, in a hearing on July 20, did not exclude the government from the case.

Mukesh Ambani-controlled Reliance Industries, which has interests in the energy, petrochemicals and retail sector, rose 3.2 percent.

Reliance Natural Resources (RENR.BO: Quote, Profile, Research), controlled by Anil Ambani, gained 5.3 percent in a broader market .BSESN up 2.3 percent.

For a timeline on the Ambani dispute, see [ID:nBOM492601] (Editing by Ranjit Gangadharan and Anshuman Daga)