* Texas judge expected to decide winning bid on Monday
* Analyst says Grupo Mexico shares could move up to 15 pct
* Grupo seeks to extinguish possible $7.5 bln liability

NEW YORK/MEXICO CITY - A U.S. federal judge is expected to decide on Monday whether Grupo Mexico (GMEXICOB.MX) or India's Sterlite Industries (STRL.BO) will control Asarco LLC, bringing the U.S. copper miner a step closer to leaving bankruptcy after four years.

At stake are Asarco's copper mines in Arizona and $7.5 billion in damages related to a piece of Peruvian miner Southern Copper Corp (PCU.N) that had been owned by Asarco.

A lawyer representing Asarco, Jack Kinzie of Baker Botts LLC, said on Friday that Judge Richard Schmidt would likely make his decision public Monday. Final arguments ended earlier this week in bankruptcy court in Corpus Christi, Texas.

Grupo Mexico, the largest copper miner in Mexico, bought Asarco in 1999 but lacks control because of the bankruptcy.

A U.S. federal judge in April found that Grupo Mexico had made a fraudulent transfer of Asarco's crown jewel stake in Southern Copper in 2003 and ordered Grupo Mexico to return the stake along with a cash payment. Grupo Mexico is appealing.

If Sterlite took over Asarco, it could get the $7.5 billion. One analyst said that was the main reason Grupo Mexico wanted to win back control of Asarco.

In the long term, this (Grupo Mexico) is a stock with very good fundamentals and if you add to that the fact that it could end up with Asarco, its fundamentals are even better, said Rodrigo Heredia, an analyst at Ixe brokerage in Mexico City.

SHARES COULD MOVE

Heredia estimated that Grupo Mexico shares could fall or rise by as much as 15 percent, depending on the decision.

Shares of Grupo Mexico rose 4.4 percent to 20.10 pesos on Friday, having gained more than 9 percent in the last two sessions as investors bet on a favorable ruling on Asarco.

Asarco, which sought bankruptcy protection in 2005 amid a strike and more than $1 billion in environmental damage and asbestos claims, has told the court it wants to be sold to Sterlite as part of its reorganization plan.

Sterlite also has the support of Asarco's workers, though Grupo Mexico this week offered to extend their current collective bargain agreement through 2011. [ID:nN27333736]

Grupo Mexico has offered to pay creditors' $2.2 billion in cash to cover liabilities and keep ownership of Asarco. Its offer also includes a $280 million note to asbestos claimants.

Sterlite, a unit of Vedanta Resources PLC (VED.L), has offered an amount equal to about $2.1 billion.

One Wall Street analyst who covers Grupo Mexico, said Asarco's production was not insignificant, but warned it was something of an unknown quantity. Asarco said its has capacity of up to about 200,000 tons per year at its U.S. copper mines.

There has been no update (of known reserves at its mines) for years. You don't know if the mine has been stripped bare or how expensive it is to mine, said the analyst who said he was not authorized to speak to the press.

The case is in re: Asarco LLC, U.S. Bankruptcy Court, Southern District of Texas, No. 05-21207. (Additional reporting by Caroline Humer and Steve James in New York; Editing by Tim Dobbyn)

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