UPDATE 1-Russian agency allows RUSAL to buy into Norilsk

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MOSCOW, Jan 31 (Reuters) - Russia's antitrust agency said on Thursday it had allowed United Company RUSAL to buy a stake of 29 percent in metals major Norilsk Nickel (GMKN.MM: Quote, Profile, Research).

RUSAL has said it was seeking to buy a stake of 25 percent in Norilsk from Onexim Group, controlled by billionaire Mikhail Prokhorov, and a 2 percent stake from KM-Invest, which manages assets belonging to Prokhorov and his former partner Vladimir Potanin.

Under the deal, Prokhorov, who is involved in a complicated process of dividing assets with Prokhorov, would receive an 11 percent stake in RUSAL and an undisclosed cash sum.

One of RUSAL's shareholders, billionaire Viktor Vekselberg, said this month RUSAL and Norilsk were discussing a full merger, which would create a globally competitive Russian metals and mining major.

But Russian media reported that Potanin, who has over 25 percent in Norilsk, opposes the idea, as he would be deprived of his decision-making role and entitled only to a minority stake in the combined firm.

Norilsk, which has a market value of $45 billion, mines a fifth of the world's nickel and more than half of its palladium.

RUSAL, the world's largest aluminium producer, valued at around $30 billion, accounts for 12 percent of global aluminium output and 15 percent of alumina. (Reporting by Tanya Mosolova; Editing by Rory Channing)