UPDATE 1-Barclays says China's CDB investing as planned

(adds details)

BEIJING/LONDON, July 16 (Reuters) - China Development Bank is proceeding with its planned investment in Barclays (BARC.L: Quote, Profile, Research) as agreed last month, the UK bank said after a report China had rejected the 136 million pound ($272 million) deal.

Caijing Magazine reported earlier on Wednesday the investment by CDB had been rejected by the State Council, or cabinet. The well-connected financial magazine said several unnamed government agencies had objected to the investment.

"China Development Bank is fulfilling all the obligations under its agreement with Barclays and the transaction is proceeding as planned," a spokesman for Barclays said.

The bank declined to comment further. A person familiar with the matter said CDB's investment was in Hong Kong ready for delivery.

The investment is part of a 4.5 billion pound fundraising by Barclays and would maintain CDB's stake at about 3.1 percent.

CDB was not immediately available for comment. Caijing cited unnamed sources from the state-owned Chinese bank as saying it was still committed to Barclays as a long-term partner.

Barclays is offering all its shareholders until Thursday the opportunity to take part in the cash call, which could trim the amount that CDB invests.

Under the terms of the June 25 fundraising, all investors can buy shares at 282 pence in proportion to their existing holdings, but given that Barclays shares are trading 245 pence, or 13 percent below the offer price, shareholders may be unwilling to step in.