Italy to decide by September whether to sanction Pirelli's Chinese investor

ROME (Reuters) -Italy will decide by September whether to sanction Pirelli's Chinese shareholder Sinochem for breaching rules Rome imposed to curb Beijing's influence over the tyremaker, people familiar with the matter told Reuters.

The government probe risks exacerbating a spat between Pirelli, its leading Italian shareholder Camfin and Sinochem, with the first two claiming that China's substantial holding poses a risk to the group's ambitions to expand its business in the United States.

Sinochem declined to comment while Pirelli was not available for comment.

Prime Minister Giorgia Meloni's government was due to decide by July 31 but has extended the deadline to complete its scrutiny of the case by 60 days until end-September, the sources said, asking not to be named.

The government, which has ruled that Pirelli must not take instructions from the Chinese investor, launched an investigation in November last year to check whether the presence of its executives on the tyremaker's board was in breach of these curbs.

Sinochem is Pirelli's largest investor with a 37% stake, while Camfim, the vehicle of veteran Italian businessman Marco Tronchetti Provera, holds 27.4%.

Tronchetti Provera, who has been Pirelli's top boss for more than three decades, is lobbying the government to take further action to limit Chinese influence over the company, Reuters reported in June.

(Reporting by Giuseppe Fonte, additional reporting by Giulio Piovaccari, editing by Gavin Jones)