UPDATE 2-Canada's energy shares burned by blocked Progress bid

Mon Oct 22, 2012 12:28pm EDT
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(Updates with details, analyst commentary)

* Progress shares down more than 11 percent

* Nexen shares fall more than 5 percent

* Mid-tier oil and gas plays see sharp falls

By Claire Sibonney

TORONTO, Oct 22 (Reuters) - Leading Canadian energy companies' shares tumbled on Monday after the government's shock rejection of a Malaysian takeover bid for Progress Energy Resources Corp raised fresh doubts about Canada's willingness to accept foreign investment.

Progress Energy skidded 11 percent to C$19.26 on the Toronto Stock Exchange, below Petronas's initial C$20.45-per-share offer in June, a nearly 80 percent premium at the time. Petronas raised its offer to C$22 in July.

Nexen Inc shares were down about 5.3 percent at C$23.82 on heightened uncertainty over a C$15.1 billion ($15.24 billion) offer for the company by Chinese state-owned CNOOC Ltd , which Ottawa is also scrutinizing.

Canadian Industry Minister Christian Paradis said late Friday night that Petronas' C$5.17 billion bid for Progress - one of the largest owners of exploration lands in the gas-rich Montney shale region in northeastern British Columbia - would not provide the "net benefit" for the country required by Canada's foreign investment laws.   Continued...