By Joseph Chaney and Victoria Thieberger

HONG KONG/MELBOURNE, Sept 3 (Reuters) - Chinese officialshave ordered state companies to meet investment bankers toexplore ways to block BHP Billiton's $39 billion bid for PotashCorp, a source with direct knowledge of the matter said.

In response to the directive, Sinochem is holding meetingswith several banks, the source said on Friday, includingCitigroup, HSBC and Morgan Stanley.

The order from Beijing underscores the seriousness withwhich China is taking the potential BHP-Potash tie up and itsimplications for the pricing and supply of the crop nutrient,despite obstacles to launching a successful counter-bid.

"They are being instructed," the source said, adding theorder was issued late last week. "The chairman of Sinochem hasbeen asked to speak to other banks."

A Wall Street Journal report on Thursday said Sinochem hadhired HSBC to advise on options pertaining to Potash Corp.

One option being discussed is the possibility of Sinochemlinking with China's $300 billion sovereign wealth fund CIC,according to a second banking source familiar with the matter.

The most likely scenario is that China will consider buyinga blocking stake, rather than attempt a complete takeover ofPotash Corp, said both sources who were not authorised to speakpublicly due to the sensitive nature of the discussions.

Assuming a consortium pays a 20 percent premium to Potash'smarket price, a 15 percent stake would cost about $8.3 billion.

Sinochem and the banks declined to comment. CIC could notimmediately be reached.

BHP CEO Marius Kloppers has poured cold water on thepossibility of a rival bid but another source close to thesituation in Europe said the latest developments are evidence ofsolid interest in Potash Corp by third parties.

"This shows there's credibility from Potash Corp, it's notjust hot air. It's not just a go-it-alone defence. There's quitea lot of activity in terms of discussions," said the source.

PENSION FUNDS

Potash shares in New York edged down 0.4 percent to $148 by1620 GMT, still 14 percent higher than BHP's $130 a share bid.BHP's London shares closed 1.8 percent higher as the miningsector took heart from higher than expected U.S. jobs data.

Chinese firms have also approached at least one big Canadianpension manager about a bid for Potash Corp. The disclosure onThursday by Alberta Investment Management Corp, which managessome C$70 billion ($67 billion) in public sector pension funds,was one of the first pieces of hard evidence to back upspeculation that China is looking for a way to derail a takeoverof the Canadian company.

The possibility of Chinese involvement in a valuableCanadian resource has raised concerns in Saskatchewan, which isworried that a takeover of its largest company by a foreign firmor major customer could affect jobs and government revenue.

For its part, BHP had been eyeing a major acquisition in theoil and gas sector over the past year, but was unlikely to moveon its ambitions while it is tied up with its bid for PotashCorp, a source said on Friday.

BHP, flush with cash since abandoning a 140 billion takeoverof Rio Tinto in 2008, has been seeking deals to cement itsposition as the world's largest diversified miner.

It considered, then abandoned, a joint offer with RoyalDutch Shell last year for Australian oil and gas firm WoodsidePetroleum worth some A$35 billion ($31.9 billion), theAustralian newspaper reported on Friday.

BHP declined to comment on the report, which also cited anunnamed global energy industry figure as saying it may also beinterested in Anadarko Petroleum Corp.

"The problem with Woodside is it is a very expensive oilcompany and because there is always takeover speculation, it isvery hard to make the numbers work," a source familiar with thesituation told Reuters.

BHP chief Marius Kloppers is focused on wooing Potashshareholders and BHP's own investors about the merits of theoffer. He is expected to spend the next few weeks shuttlingbetween Europe and North America as he tries to clinch his firstmajor deal after three years in the post.

"They are pretty busy right now, but they are a big companyso within six to 12 months of getting one deal done there couldbe presumably be another one," the source added. (Additional reporting by Narayanan Somasundaram in Sydney, RodNickel in Toronto, Michael Flaherty and Denny Thomas in HongKong, Tracy Zheng in Beijing and Eric Onstad in London; Editingby Hans Peters and David Holmes)