CALGARY, Alberta, Oct 20 (Reuters) - Canada said on Saturday it still invites foreign investment in natural resources despite its surprise rejection of a C$5.17 billion ($5.2 billion) takeover of Progress Energy Resources Corp by Malaysia's Petronas, a deal that had been expected to pass muster easily.

The rejection late on Friday of the buyout of Progress, a natural gas producer, has sparked criticism from some investors about perceived protectionism and raised questions whether the larger and more controversial bid for Nexen Inc by China's CNOOC Ltd has a chance of being approved.

"Canada has one of the best investment climates in the world and a long-standing reputation for welcoming foreign investment," said Margaux Stastny, spokeswoman for Industry Minister Christian Paradis, who blocked the Petronas bid minutes before the deadline for a decision.

"Canada has a broad framework in place to promote trade and investment, while at the same time protecting Canadian interests. Our government welcomes foreign investment that benefits Canada," Stastny said in an email.

The government of Prime Minister Stephen Harper has devoted much time and effort to seeking foreign capital needed to help develop natural resources such as the Alberta oil sands, and much of that has been directed at Asia.

Meanwhile, the issue of growing foreign control over natural resources has become increasingly contentious among the Canadian public and even within Harper's own government.

Large foreign takeovers are vetted by Investment Canada to determine if they will result in a net benefit to Canada. But the yardsticks for such reviews remain murky.

Harper has promised a clear set of guidelines when the government releases its decision on the CNOOC takeover of Nexen in the coming weeks.