LONDON - A shareholder in investment fund Trading Emissions and Leaf Clean Energy will oppose a merger, the two sides said on Thursday, a change in position that has thrown the deal into doubt.

Trading Emission said Moore Capital, which holds 16 percent of Trading Emissions voting rights and 3.3 percent of Leaf Clean voting rights, had told both boards it would not back the merger at an extraordinary general meeting (EGM) on February 19.

Without Moore Capital's support the merger is now in jeopardy, said Gus Hochschild, an analyst at Mirabaud Securities.

In December, Leaf Clean, which invests in clean-energy companies mainly in North America, agreed to merge with closed-end fund Trading Emissions, which generates carbon credits by investing in projects in emerging countries under the Kyoto Protocol climate pact.

Moore Capital was unavailable for comment. It has previously said it would vote in favor of the merger.

All we call say is that the EGM on February 19 goes ahead and the recommendations still stand. Nothing else changes, said Trading Emissions' PR advisor Peter Rigby.

Leaf Clean shares were up 4.17 percent at 65 pence while Trading Emissions traded up 4.12 percent at 88.5 pence at 1309 GMT.

I suspect that a lot of Trading Emissions shareholders want the company wound up before Kyoto expires, so adding to the company's assets will not make that process easier. The other critical factor is the undervaluation of Trading Emissions shares, Mirabaud's Hochschild said, adding that he values them at around 120 pence per share.

The deal, which constitutes a reverse takeover for Leaf Clean under the AIM rules, would create the largest carbon-focused company listed in London, the companies said.

(Reporting by Michael Szabo and Nina Chestney; editing by Karen Foster)