UPDATE 2-Japan's SMFG, Singapore's OCBC compete for majority stake in Indonesian bank -sources

* Bank Permata sees strong interest from bidders-sources

* Standard Chartered, Astra International hold 90% stake

* Permata valued at $2.7 bln after shares surge this year

* Final shortlist expected after one more round - source

* Japanese, Asian banks increasingly target Indonesia (Adds details on Permata and Japanese banks)

By Anshuman Daga and Takashi Umekawa

SINGAPORE, Nov 7 (Reuters) - Sumitomo Mitsui Financial Group (SMFG) and Singapore lender OCBC Group Holdings are vying to buy Indonesia's PT Bank Permata and are working on respective offers, sources familiar with the matter said on Thursday.

Japanese and other Asian banks are increasingly targeting a presence in Indonesia in the hope of tapping an emerging middle class in the country with a population of 260 million people.

Standard Chartered Plc (StanChart) and Indonesian conglomerate PT Astra International each own a 45% stake in Permata, whose shares have nearly doubled this year to value it at about $2.7 billion.

Takeover interest in Permata gained ground this year after StanChart said in February that its investment in the bank was no longer core, signalling it was open to selling its stake.

Established in 1955, Permata operates about 320 branches in Southeast Asia's biggest economy and is a medium-sized bank among Indonesia's 100-plus lenders.

SMFG and OCBC are seen as the frontrunners though sources said DBS Group Holdings Ltd, Singapore's largest bank, and other Southeast Asian banks were also interested in Permata.

SMFG, OCBC, DBS and StanChart declined to comment while there was no immediate response from Astra.

The sources declined to be named as they were not authorised to speak to the media.

One source said he expected at least two parties to be shortlisted for the final round, which is likely to take place in the next couple of weeks.

SMFG's banking unit and OCBC have separately carried out due diligence on Permata in the last few months, the sources said.

They said Bank Permata's owners were seeking a valuation in excess of the 1.6 times book value it currently commands.

Japanese banks have been stepping up overseas investments as they struggle with razor-thin margins at home amid an ageing population and massive central bank stimulus.

SMFG has also been acquisitive, particularly in Asia, and completed the purchase of mid-sized Indonesian lender PT Bank Tabungan Pensiunan Nasional Tbk this year.

Mitsubishi UFJ Financial Group (MUFG) bought a 94% stake in PT Bank Danamon Indonesia in phases, starting from late 2017, in deals that valued the lender at more than $6 billion. (Reporting by Anshuman Daga in Singapore and Takashi Umekawa in Tokyo; additional reporting by Fransiska Nangoy in Jakarta; editing by Emelia Sithole-Matarise and Susan Fenton)