A raft of bidders including J.P. Morgan is lining up for failed brokerage MF Global's stake in the London Metals Exchange, two sources familiar with the situation said, providing some solace for creditors.

If succesful, a bid would make the U.S. investment bank one of the largest shareholders in the venerable London institution -- one of the few exchanges to still operate an open outcry ring -- with a stake of just under 11 percent.

There are multiple parties involved, one of the sources told Reuters, requesting anonymity. It'll be done in the short term I believe, the source said.

A sale of MF Global's 4.7 percent stake could shift the odds in the takeover battle for the LME, the world's biggest metal market, which has thrown its doors open to a potential 1 billion pound ($1.6 billion) takeover.

Goldman Sachs is also a large shareholder in the LME. Two likely contenders for the 1877-founded group are the Chicago Mercantile Exchange and the IntercontinentalExchange.

Selling the stake would also be boost for creditors of the futures brokerage, which filed for bankruptcy protection last month, and for its clients, some of whom have seen their positions frozen ever since.

The whereabouts of about $600 million of customer funds unaccounted for since MF Global went under is still unclear, and it remains an open question whether the group might have improperly mixed these funds with its own.

KPMG has told MF Global's clients they will get back much-needed funds before on an interim basis, saying on Friday it was likely to make first distributions before finally liquidating or transferring all risk positions.

J.P. Morgan, which already holds a 6.2 percent stake in the LME, declined to comment, as did KPMG, the administrator of MF Global's UK arm. The news of the wide interest for the stake was first reported by the Financial Times..

(Reporting by Douwe Miedema)