SYDNEY - National Australia Bank Ltd inched a step closer to a A$12 billion deal to buy AXA Asia Pacific Ltd after completing due diligence, as rival bidder AMP Ltd mulled its options.

NAB's proposal still hinges on winning the support of AXA SA, which is currently bidding in a consortium with AMP, to take over AXA Pacific's business outside Australia and New Zealand.

Discussions cannot commence until the (Feb 6) conclusion of the exclusivity agreement with AXA SA and AMP Ltd, said AXA said in a statement on Friday.

Both the NAB and AMP proposals involve acquiring all of AXA Asia Pacific, selling the company's Asian assets to the French parent and keeping the Australia and New Zealand businesses.

NAB trumped AMP's bid last month by offering an all-cash alternative and won the crucial support from AXA Asia Pacific's independent directors.

AMP was also put in a tight spot after it declared its offer best and final as Australian takeover laws prevent a bidder from increasing their offer after declaring it final.

NAB shares were down 2 percent at A$26.65, AMP off 1.7 percent at A$6.48. AXA was down 0.8 percent to A$6.55, but still above the A$6.43 per share in cash offered by NAB. The broader market .AXJO was down 1.8 percent.

On Thursday, AXA Asia Pacific upped the ante by forecasting a better-than-expected profit for 2009, which some analysts said further weakened AMP's position in the bidding.

That has also raised the prospects of NAB lifting its offer.

NAB is seeking to bolster is position in Australia's rapidly growing $900 billion wealth management industry, which is underpinned by the government mandated pension plan.

The NAB proposal remains subject to a number of important matters including reaching an agreement with AXA SA, AXA Asia Pacific said.

NAB's proposal would give AXA Asia-Pacific shareholders either A$6.43 cash per share or A$1.59 cash and 0.1745 of a NAB share. AMP and AXA SA have offered 0.6896 AMP shares plus cash of A$1.92 per share.

AMP, which sweetened its initial bid, is still offering a cash and stock offer, and has been rejected by AXA Asia Pacific's independent directors.

JP Morgan Chase & Co (JPM.N) is advising NAB. AXA is advised by Macquarie Group, while Deutsche Bank AG is advising AXA SA. AMP is advised by UBS.

(Reporting by Denny Thomas; Editing by Balazs Koranyi)