Blackstone in talks to buy stake in Taipei 101 tower operator-sources

* Blackstone assures Taiwan no China-backed funds involved-sources

* TFCC board meets Wed to decide on letting Blackstone see books

* Taiwan govt would approve stake purchase -source (Adds comments from sources, background throughout)

By Faith Hung

TAIPEI, Oct 27 ( Reuters) - Private equity firm Blackstone is in talks to buy a nearly 38 percent stake in the operator of the Taipei 101 tower, people with direct knowledge of the matter said, in a deal that could be worth up to $700 million.

The U.S. firm has assured the Taiwan government it will not use Chinese-backed money to buy the stake in the Taipei Financial Center Corp (TFCC), two sources said on Tuesday. TFCC's Taipei 101 is among the 10 tallest buildings in the world. The stake will be sold by Taiwanese food conglomerate Ting Hsin International Group.

"Blackstone has checked the private equity fund it would use to buy the potential stake. No Chinese investors are in this fund," said one of the sources. "I have provided them a certification."

Blackstone's move to check funding sources underscores the Taiwan government's concerns that the island's economy will be overly influenced by Chinese-backed capital. Taipei and Beijing remain political foes even though cross-strait trade ties have improved to their warmest level in more than six decades since President Ma Ying-jeou took office in 2008.

China sees Taiwan as a renegade province, and has vowed to take it back by force, if necessary.

Malaysia's IOI Properties Group backed out of a proposal in March to buy a 37.17 percent stake in TFCC for $751 million after the Taiwan government said it was opposed to foreign control of the landmark skyscraper.

Taiwanese media had said then that part of the government's opposition to the deal was based on suspicion that Chinese funding was involved in that bid.

TFCC will hold a board meeting on Wednesday to decide on whether to give Blackstone access to its books for due diligence, the people added. The U.S. firm could then make an offer to buy the 37.17 percent stake in a deal estimated by analysts to be worth up to $700 million.

An external spokeswoman for Blackstone in Hong Kong declined to comment. Ting Hsin officials could not be reached for comment. The sources declined to be identified as the discussions are confidential.

The potential deal will probably get the green light from the finance ministry, TFCC's controlling shareholder, said one of the sources, adding that given Blackstone's good reputation, the ministry would approve the deal if there are no special negative circumstances.

When contacted, an official in the finance ministry said the ministry would "totally respect TFCC's board decision". The official declined to elaborate further. (Additional reporting by Elzio Barreto in HONG KONG; Editing by Denny Thomas and Muralikumar Anantharaman)