Canada still welcomes foreign direct investment despite the federal government's refusal late last week to approve the C$5.17 billion ($5.17 billion) acquisition of Progress Energy Resources Corp by Malaysian state oil company Petronas [PETR.UL}, the country's finance minister said on Sunday.

Finance Minister Jim Flaherty told CTV's "Question Period" program proposed acquisitions needed to be correct and that Canada's industry minister can impose conditions on any transactions.

However, he said in the transcript of the interview that Industry Minister Christian Paradis and the companies were continuing discussions on satisfying the government's concerns with the deal.

($1 = $0.99 Canadian)

(Reporting by Scott Haggett; Editing by Maureen Bavdek)