** Shares in Iveco IVG.MI rise as much as 6.6% to record highs following reports of interest for its defence unit, as the group prepares to spin off the business

** Franco-German joint venture KNDS, Czech company CGS and UK defence giant BAE Systems BAES.L are interested in buying the defence division IDV, Il Corriere della Sera newspaper reported on Tuesday citing unnamed sources

** According to the report, Iveco has appointed Goldman Sachs to assess how best to approach the spin-off, with the aim of completing the operation by year-end

** Corriere adds the listing of the unit is among the options, with a potential valuation of 1 billion euros ($1.1 billion) as the demand for European defence rises

** Iveco declined to comment in response to a request by Reuters

** As of 0848 GMT, the Iveco shares are up 5.5%, after hitting a record high of 17.225 euros per share earlier in the session

($1 = 0.9131 euros)

(Reporting by Enrico Sciacovelli)

((Enrico.sciacovelli@thomsonreuters.com))