Belgian-based RHJ International is set to sweeten its offer for General Motors' European business in its race with Canadian rival Magna to buy Opel, sources close to the situation said on Wednesday.

The private equity firm is prepared to seek less than 3 billion euros ($4.24 billion) in state aid for the deal, over 800 million euros less than it originally sought, one of the sources said.

In Brussels, an RHJ spokesman declined to comment on its offer or any move to improve it as a way to help budge Berlin from its clear support for Magna's approach.

A spokesman for Germany's economy ministry said he was unaware of any improved offer other than what he had read in the media.

Opel labor leader Klaus Franz was quoted by the Handelsblatt newspaper as saying he suspected RHJ could curtail planned investments in the German carmaker to save money, something he said would jeopardize Opel's long-term prospects.

But RHJ board member Gerd Haeusler disputed this.

The suspicion that RHJ wants to scale back investments in Opel is utter nonsense, he said.

Berlin supports Magna's offer, backed by Russian state bank Sberbank , on the grounds that it offers better protection for the 25,000 jobs on Opel's payroll in Germany.

GM has expressed reservations about the Magna deal, saying it wants to make sure that its proprietary technology in Opel is protected in any partnership. Talks between GM and Magna last week failed to produce a deal for Opel.

GM Chief Executive Fritz Henderson told Reuters Television in an interview on Tuesday that he did not expect to reopen the Opel sale to any party beyond Magna and RHJ.

(Reporting by Gernot Heller, Philipp Halstrick and Anne Jolis, Editing by Richard Hubbard)

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