Jan. 19 (Bloomberg) -- Shares of India's Tata Steel Ltd. fell after the Economic Times said the company may pay as much as 600 pence a share for Corus Group Plc, 20 percent more than its earlier offer, countering Cia Siderurgica Nacional SA.

Tata may increase its offer to 530 pence a share and wait for Brazil's CSN to respond before raising it, the paper said, citing people it didn't identify. At 600 pence, Corus would be valued at $11.1 billion, the report said. The information is ``baseless,'' the paper cited a Tata spokesman as saying.

Corus, formerly British Steel Plc, has become a prize for Tata and CSN as producers seek to increase bargaining power with suppliers of iron ore and coal. Tata shares are the third-worst performer on India's benchmark Sensitive index in the past three months, signaling the company may be bidding too much.

``The stock has been an underperformer and people want to know when this is going to end,'' said Bharath S., an analyst at Sundaram BNP Paribas Mutual Fund in Chennai, India. ``The stock reacts every time there is news of the company raising the offer.'' The fund, which has $1.5 billion in India, doesn't own Tata Steel shares, according to Bloomberg data.

Sanjay Choudhry, a spokesman for Tata Steel, declined to elaborate on his comments given earlier to the Economic Times.

``I have nothing more to add to what I have already told the paper,'' said Sanjay Choudhry, a spokesman for Tata Steel, when contacted in Jamshedpur, India, by Bloomberg News today.

Fifth-Biggest

A combination of CSN or Tata with Corus would produce 23.4 million tons of steel, ranking it as the world's fifth-biggest steelmaker, behind Arcelor Mittal, Nippon Steel Corp., Posco and JFE Holdings Inc. The purchase may not immediately lift earnings at the new company, Stephen Pope, head of equity research at Cantor Fitzgerald in London, said in e-mailed comments today.

``There is always a lag in bedding in a new acquisition until an immediate impact is seen on the bottom line,'' Pope said. ``Whether it be CSN or Tata the combined return on equity could undergo a J-curve decline before it improves.''

Shares of Tata Steel fell for a second day, declining 7.95 rupees, or 1.7 percent, to 467.60 rupees in Mumbai, valuing the Mumbai-based steelmaker at $6.13 billion.

Corus shares gained 7.5 pence, or 1.4 percent, to 545 pence in London, the highest since March 2000. The stock has advanced 34 percent since India's Business Standard reported Oct. 4 that Tata may bid as much as 580 pence a share.

Tata Steel offered 455 pence a share on Oct. 20, valuing the U.K. company at $8 billion, and CSN topped that on Nov. 17.

Brazil's CSN raised its offer for Corus on Dec. 11 to 515 pence a share ($10.12). That's three percent higher than the 500 pence offered by Tata Steel. The U.K. Takeover Panel said Dec. 19 that the battle for Corus will have to be decided by auction if the two companies' offers remain outstanding on Jan. 30.

To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net.

Last Updated: January 19, 2007 12:42 EST