(Refiles to remove duplication of word 'would' in paragraph 3)
MILAN, April 9 (Reuters) - Hutchison Whampoa 0013.HK could be targeting a stake of 29.9 percent in Telecom Italia (TLIT.MI) as part of a deal that would give the Italian company Hutchison's local mobile business, 3 Italia, newspaper Il Messagero said on Tuesday.
Shares in Telecom Italia jumped an initial 5 percent on the back of the report at the opening and were still up 3.4 percent at 0.59 euros at 0828 GMT.
The Hong Kong-based group would be willing to buy some Telecom Italia shares at 1.2 euros each in cash in addition to selling 3 Italia for shares in Telecom Italia, the newspaper said.
This price is twice the current market price of Telecom Italia shares but equivalent to the value that controlling shareholders have booked in their accounts.
The board of Telecom Italia is expected to discuss the possible purchase of 3 Italia at a board meeting on Thursday.
"We note Telecom Italia has stressed that discussions are at a preliminary stage therefore we remain cautious about the details of unconfirmed press reports," said analysts at Espirito Santo Investment Bank.
However, they said if Hutchison were able to reach such a stake in Telecom Italia it would replace the Telco consortium as controlling shareholder, "which is in our view an unlikely scenario in a simple merger deal".
The Italian group is 22.4-percent-owned by holding company Telco, which has Spanish operator Telefonica (TEF.MC) and Italian groups Generali(GASI.MI), Mediobanca (MDBI.MI) and Intesa Sanpaolo (ISP.MI) as its shareholders.
Insiders say any plan to take a controlling stake in Telecom Italia would have to involve the buying out of Telco shareholders, who are however unwilling to sell at a loss.
Last year the group turned down a 3-billion-euro cash injection by Egyptian tycoon Naguib Sawiris, who was valuing the shares at 0.7 euros each.
Telecom Italia and Hutchison did not immediately reply to a request for comments.
(Reporting By Lisa Jucca and Danilo Masoni in Milan and Donny Kwok in Hong Kong; Editing by Greg Mahlich)
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