China's $410 billion sovereign wealth fund China Investment Corp. is set to receive additional funding of up to $50 billion, two sources said, a step that could help it move quickly to buy overseas assets, especially in Europe.

The new funding comes along with an agreement between relevant Chinese government agencies to give CIC new money to manage every year, the sources who had knowledge of the matter told Reuters on Friday.

The sources asked not to be identified due to the sensitivity surrounding China's management of its foreign reserves.

The agreement would lay out a long-term framework under which CIC would be allocated money to manage from China's foreign exchange reserves and would also chart the future of its domestic investment arm, Central Huijin Investment, the sources said.

The final plan for capital injection will be unveiled shortly and it could be $50 billion, a source close to the matter said.

CIC officials declined to comment.

The cash injection follows in the wake of plans -- reported by Reuters earlier this month -- to create a new $300 billion vehicle that would be affiliated with China's State Administration of Foreign Exchange (SAFE), the part of the central bank in charge of the daily management of China's $3.2 trillion in foreign exchange reserves.

The new funds for CIC, as well as the planned $300 billion venture under SAFE, were earmarked well before the onset of the euro zone debt crisis that has sparked international speculation about possible contributions from China to a bailout effort.

But the funding would give CIC firepower for buys at a time when attractive European and U.S. assets may come up for sale. CIC operates independently of the central bank and said in March that it had fully invested all its cash and would like the government to allocate it more money.

Chinese media have reported since late 2009 that CIC was seeking $100-$200 billion in new funding, but there have been no subsequent reports of progress.

CIC was created in 2007 when China's Ministry of Finance issued 1.55 trillion yuan in special yuan bonds to swap yuan for $200 billion worth of foreign currency from SAFE.

That provided the initial funds for active management in a bid to enhance returns from the world's largest pile of official foreign reserves.


China's leaders have said recently that they will seek investments in the real economies of the United States and Europe apart from their routine investments in government debt.

Germany's 'manager magazin' reported in an excerpt of an article to be published on Friday, citing company sources, that CIC was the frontrunner to take a 5-10 percent stake in German luxury carmaker Daimler .

The magazine said Daimler's chief financial officer, Bodo Uebber, had hired an investment bank to arrange a potential deal. Daimler's chief executive, Dieter Zetsche, in July said he would welcome additional investors from China, but added he did not think the Chinese would try to take control.

On Thursday, South Africa's Shanduka Group said it had sold a 25 percent stake to CIC, the latest investment by China in Africa's resources sector.

Shanduka has a diversified asset base that includes coal operations and said in a statement CIC had paid 2 billion rand ($240 million) for the stake.

CIC acquired its shares primarily from exiting shareholders Old Mutual Private Equity and South African investment bank and asset manager Investec .

Separately on Thursday, state-owned firm China Three Gorges won the competition to buy Portugal's stake in utility EDP , paying 2.7 billion euros ($3.5 billion), in a privatization seen key to the indebted euro zone country's ability to sell state assets.

The deal also includes Chinese investment in the wider economy and is the brightest news for Portugal since it was forced to seek a 78 billion euro bailout from the European Union and International Monetary Fund in the spring.

(Reporting by Beijing Newsroom; Editing by Nick Edwards, Matt Driskill, Don Durfee and Muralikumar Anantharaman)