A probe has been launched into the handling of insurer Prudential's

failed $35.5 billion bid for AIA <1299.HK>, the Financial Times said on Thursday.

Citing unidentified sources familiar with the matter, the newspaper said the Financial Services Authority ordered Prudential to commission law firm Clifford Chance to conduct an inquiry because of concerns over the management of the deal.

The Section 166 investigation, which could lead to enforcement action by the FSA, is focusing on Prudential's investment bank advisers, Credit Suisse , JPMorgan and HSBC , and whether they discharged their duties properly, it added.

Prudential's AIA bid collapsed last June after investors baulked at the price, and AIA's U.S. parent then rejected a lower bid, leaving the insurer to shoulder costs of 377 million pounds.

A spokeswoman for the FSA said it did not comment on individual firms. Prudential and Clifford Chance were not immediately reachable for comment.

(Reporting by Karolina Tagaris; Editing by Tim Dobbyn)

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