DEALTALK-Markets buzz with talk of China-Sime Darby deal

* Deal may boost Sime's China businesses, open opportunities

* Could raise $1.6 bln, fund Sime's expansion

* May help China meet edible oil supply

* China President Hu in Malaysia Nov 10-11 (For more Reuters DEALTALKS, click [DEALTALK/])

By Julie Goh and Soo Ai Peng

KUALA LUMPUR, Nov 4 (Reuters) - With China's President Hu Jintao visiting Malaysia next week, speculation is swirling the Malaysian government may finally seal a deal to sell 10 percent of planter Sime Darby (SIME.KL: Quote, Profile, Research) to a Chinese group.

Media reports that Malaysia had offered China the stake in Sime, the country's biggest palm plantation firm by land ownership, first emerged in September, but were dismissed by Prime Minister Najib Razak as pure speculation. [ID:nKLA010404]

The chatter about the agreement that could be worth about $1.6 billion, is back, with one investment bank spelling out likely implications of the possible deal.

"Sime Darby could also spin off its plantations business, with a Chinese state-owned company taking a direct stake, since there would be little strategic value in its property and car businesses," said the research report, obtained by Reuters through an investment banking source.