Updates shares, paragraph 5; adds more on the expected deal, paragraphs 6-9

July 6 (Reuters) - Canada has picked Germany’s TKMS TKMS.DE to build 12 submarines for Canada's navy, The Globe and Mail reported on Monday.

The announcement will be made before Canadian Prime Minister Mark Carney heads to a NATO leaders’ summit scheduled for Tuesday and Wednesday in Turkey, the report said, citing sources.

The Prime Minister's Office did not immediately respond to a request for comment. Carney was due to make an announcement related to security in Halifax on Monday afternoon.

TKMS, majority-owned by German conglomerate Thyssenkrupp TKAG.DE, is offering its 212CD class submarine model in the tender, which it is also supplying to Norway's navy under a joint program.

Shares in TKMS rose as much as 12.9% on the news, hitting their highest level in nearly four months.

Canada, under pressure from the United States to increase defense spending, has said it hit NATO's military spending target of 2% of GDP earlier than originally planned. NATO leaders have agreed to spend 5% of GDP on defense and security-related investments by 2035.

South Korean shipbuilder Hanwha Ocean 042660.KS, which was also under consideration for the contract, did not immediately respond to a request for comment.

Going with the German submarine contract would mark a further deepening of ties between Europe and Canada ahead of the NATO summit, while going with South Korea would reflect Carney's goal to increase trade and business ties with Asia.

With its diamond shape, length of around 74 metres (243 feet) and non-magnetic steel, TKMS hopes the 212CD will become the new NATO standard.