By Gianluca Lo Nostro

PARIS (Reuters) - Italy could launch a tender for a secure satellite communications provider later this year, the head of Eutelsat said on Wednesday, reigniting the satellite operator's share price on speculation it could clinch the deal.

The Franco-British company's shares rocketed earlier this month on speculation that Europe might become more reluctant to do deals with Elon Musk's Starlink, amid fears the United States might use the satellite operator as a diplomatic lever.

Eutelsat's stock, which had slipped back in recent sessions, was last up more than 40%.

Italian Prime Minister Giorgia Meloni is seeking to secure encrypted communications for government, diplomatic, and defence officials in high-risk areas.

Sources had told Reuters that Rome was considering a five-year, 1.5 billion euro ($1.6 billion) deal with SpaceX's Starlink to provide secure telecommunications to the government.

But on Saturday, Italy's defence minister said talks had stalled.

Eutelsat is considered an alternative provider.

Italy's industry ministry could not immediately be reached for comment.

"Starlink ties Italy very closely to the U.S. but as you have seen with Ukraine, it requires a continuation of good relations with Elon Musk to guarantee sovereignty," Eutelsat CEO Eva Berneke told a hearing with French lawmakers.

The European Union is racing to find a replacement to Starlink for Ukraine.

Meanwhile, Italy has been separately considering using Starlink's satellite network to boost internet access in remote and underserved areas of the country.

Rome will also play a major role in the EU multi-orbit array of up to 280 satellites called IRIS2 that should go live by 2031, but current discussions are focused on the short term, Berneke said.

"2031 may be a bit far away ... we're in talks with both the military and the Italian government about what to buy before IRIS2 arrives."

Eutelsat could use spare capacity from a deal with Telecom Italia for a satellite in geostationary orbit for consumers, Berneke added.

Besides Starlink's, Eutelsat operates the only other constellation of low Earth orbit (LEO) satellites in the world, acquired after the merger with Britain's OneWeb, with over 600 of them orbiting at an altitude of about 1,200 km.

($1 = 0.9269 euros)

(Reporting by Gianluca Lo Nostro in Paris. Editing by David Evans and Mark Potter)