Any risk of foreign state control is crucial as Washington considers whether to impose new conditions on the way BAE operates in the United States - a red line for the company and Britain.

Negotiators are keen to keep respective state shareholdings under 10 percent to avoid stirring U.S. concerns over possible foreign influence on its defense sector, an issue seen certain to be highlighted by Boeing and other U.S. rivals.

U.S. experts said this weekend anything over that figure would undermine the chances of U.S. approval.

(Additional reporting by Kate Holton, Andrea Shalal-Esa, Paul Taylor, Sophie Sassard; editing by Janet McBride)