* Andean shares close up 45 pct on the TSX (Adds Goldcorp CEO comment, analyst comment, share close)

By Narayanan Somasundaram and Julie Gordon

SYDNEY/TORONTO (Reuters) - Goldcorp agreed tobuy Argentina-focused gold miner Andean Resources for C$3.6 billion ($3.4 billion), trumping a competingoffer from fellow Canadian miner Eldorado Gold Corp.

The takeover is the latest in a series of gold-mining dealsthis year, including Australia's Newcrest Mining's$8.4 billion purchase of rival Lihir Gold and Canada's Kinross $7.1 billion stock bid for Red Back Mining.

Near-record prices for the metal are boosting thehunt for reserves and pumping cash into the sector.

Goldcorp said its cash and share offer -- at C$6.50 pershare a 35 percent premium to Andean's last traded price inToronto -- has been approved unanimously by the boards ofdirectors of both companies.

Goldcorp's offer topped an all-share bid from Eldorado worthC$6.36 a share.

"Andean's plan to sell does not come as a surprise. It wasset up to be taken over at some stage. It was a question of howand what price," said Tim Barker, portfolio manager at BTFinancial Group. "The pricing and the premium looks prettyreasonable."

Andean's shares closed up over 45 percent at C$6.98 on theToronto Stock Exchange, while Goldcorp shares were down 3.7percent at C$44.49.

"This is a reasonably strong bid by Goldcorp, though withEldorado still in the picture, there does remain thepossibility that a bidding war may emerge," said ParadigmCapital analyst Don MacLean, in a note to clients.

Gold consumption rose by more than a third in the secondquarter of 2010 and is set to stay strong with India and Chinaproviding the main thrust.

Investment demand is also expected tp be firm asuncertainty about the global economic outlook boosts the appealof gold as a safe haven.

CERRO NEGRO

Goldcorp said Andean's principal asset is its 100-percentowned Cerro Negro Gold project in the southern province ofSanta Cruz in Argentina, which would add to its gold productionpipeline.

With an estimated reserve of 2.54 million ounces, CerroNegro's owner are getting top dollar for the operation.

"With this project you can add ounces year after year afteryear, and therefore, add value for your shareholders," saidGoldcorp Chief Executive Chuck Jeannes in an interview.

He said new drilling at Cerro Negro had indicatedsignificant additional resources.

"Goldcorp has been built on such tip-of-the-icebergacquisitions," Jeannes said. "We wouldn't be surprised to seethe indicated resource double in fairly short order."

Goldcorp has identified Argentina as a key region forinvestment. The company already holds a 37.5 percent stake inAlumbrera, a large gold and copper mine in the northwesternpart of the South American country.

While equity analysts put Andean's fair price at C$6.50 toC$6.60 a share, in line with the Goldcorp offer, they addedKinross, Yamana Gold and AngloGold Ashanti are well-positioned to consider a bid.

Neither Goldcorp nor Eldorado disclosed whether a deal wouldadd or cut earnings, but Goldcorp did say Cerro Negro wouldbegin producing by late 2012.

Maison Placements analyst John Ing expressed some doubt overthe production date, noting that a feasibility study,exploration and more drilling were needed before constructioncould begin.

"Goldcorp is stuck on a growth treadmill," he said. "Andthe reality is that it needs production in order to maintainits growth."

Andean is advised by BMO Capital Markets, Goldcorp by CIBCWorld Markets and Eldorado by GMP Securities.

The mining sector is leading the global M&A activity, whichrecorded $267 billion worth of deals in August, making it thebiggest month since June 2009, Thomson Reuters data showed.

The materials sector has seen a 30 percent rise in dealswith global miner BHP Billiton leading thecharge with a $39 billion offer for Canada's Potash Corp. ($1=$1.04 Canadian) (Additional reporting by Euan Rocha in Toronto, NicolasMisculin in Buenos Aires, Krishna N. Das in Bangalore and NickTrevethan in Singapore; Editing by Valerie Lee, Lincoln Feastand Peter Galloway)