* Suntory dismisses report in talks to buy Danone water business
* Danone looking to sell water assets by year-end -Bloomberg
* Danone CFO declines comment, says water business “still strategic”

TOKYO, Oct 18 (Reuters) – Japanese beverage firm Suntory Holdings denied a report on Tuesday that it is in negotiations with France’s Danone SA on buying the French group’s water assets.

Bloomberg News said Danone is in talks with Suntory about a sale of all or part of its water business, citing three sources, in a deal Danone hopes to clinch by year-end. Suntory may only buy Danone’s water operations in Asia, two of the sources said.

“We are neither in negotiations, nor bidding, for Danone’s Japanese, or any other portion of, its water business,” a Tokyo-based Suntory spokeswoman said.

Speaking in France, Danone CFO Pierre Andre Terisse declined to comment on the report but told analysts during a conference call that the water business was “still strategic” for Danone.

Last November, Danone, the world’s No 2 bottled water producer, was in early talks with unnamed parties on such a deal, a source familiar with the matter told Reuters.

Suntory, along with Japanese brewers Kirin Holdings and Asahi Group Holdings , had previously been mentioned as potential bidders for Danone’s water business, which includes Evian and Badoit bottled waters.

Japanese beverage firms have been looking abroad for growth as they battle a highly competitive and shrinking home market.

Earlier this year, Suntory entered a soft drinks venture with Indonesia’s GarudaFood and in 2009 bought soft drinks maker Orangina.