UPDATE 2-Baugur unlikely to pursue Saks bid in 2008-NY Post

(Adds Baugur comment, updates stock price)

NEW YORK, Sept 5 (Reuters) - Shares of upscale retailer Saks Inc (SKS.N) fell as much as 7 percent on Friday following reports that Icelandic investor Baugur Group was unlikely to pursue a bid this year.

Officials for both Saks and Baugur told Reuters they had no comment on the speculation.

Baugur Group Chairman Jon Asgeir Johannesson said in August that he was "actively" interested in Saks and had the cash to bid for it, but a source told the New York Post that tight credit markets and a poor economic outlook made financing all but impossible at current prices.

Baugur, which owns Britain's House of Fraser department stores, said last year in a regulatory filing that it intended to hold discussions with Saks' board about a possible acquisition.

But in April, the company said it was content with its roughly 8 percent stake and would not pursue a takeover.

Saks shares were down 44 cents, or 3.9 percent, at $10.83 in afternoon New York Stock Exchange trade after falling as low as $10.47 earlier in the session. (Reporting by Sarah Coffey in New York and Sweta Singh in Bangalore, editing by Will Waterman and Lisa Von Ahn)