Peru eases Chinese port dispute ahead of president's meeting with Xi

LIMA (Reuters) - Peru asked a judge to withdraw its request to strip a Chinese state-owned company's exclusive rights to operate a "megaport" it is building on Peru's Pacific coast, sources said on Tuesday, cooling tensions before the countries' leaders meet this week.

The government had requested in March the annulment of its decision to give Hong Kong-based Cosco Shipping Ports exclusive rights to operate the deepwater Chancay Port Terminal it is building, citing an "administrative error."

A source close to Peru's port authority told Reuters a transportation ministry prosecutor "formally requested" the withdrawal of its original request on Monday.

The announcement, days before Peruvian President Dina Boluarte is set to meet with Cosco executives and Chinese President Xi Jinping during a China visit, appears to resolve a legal dispute between the company and Boluarte's government that had sparked fears of an international arbitration process.

Last week, Peru's port authority authorized the prosecutor to make the request, another industry source told Reuters, after Congress approved changes to Peru's ports law that paved the way to ensure Cosco Shipping would have exclusive rights to operate the terminal it is constructing.

Representatives of the Chinese firm in Peru declined to comment on the Peruvian government's decision.

Peruvian authorities hope the $3.5 billion Chancay megaport will become a hub in the South American Pacific, but the project has upset players in the United States and Europe seeking to stop a rise of Chinese influence in Latin America.

Cosco Shipping expects to inaugurate the Chancay megaport in November, when the Asia-Pacific Economic Cooperation (APEC) leaders' summit is scheduled to be held in Lima.

(Reporting by Marco Aquino; Editing by Lincoln Feast.)