* Amazon lockers to be in 1,000 Casino group stores
* Casino branded products will be available on Amazon
* Amazon, Monoprix to extend Prime Now outside Paris (Adds comments from Casino official and from fund manager)
By Dominique Vidalon
PARIS, April 23 (Reuters) - E-commerce giant Amazon and French retailer Casino are expanding their partnership, with Amazon installing pick-up lockers in Casino stores and making more of the French company's products available on Amazon.
The move, which follows an initial co-operation between Casino's upmarket Monoprix supermarket chain and Amazon in Paris, could re-ignite speculation of a bigger deal later on.
An Amazon spokeswoman said it had a policy of not commenting on market speculation. Amazon's purchase of bricks-and-mortar U.S. food retailer Whole Foods Market last year has raised speculation it could buy a European food retailer.
The extended partnership comes as Casino is selling assets and cutting debt to try to allay investor concerns over its finances and those of parent company Rallye.
The deal, unveiled on Tuesday, will see Amazon lockers installed in 1,000 locations across France in nine of Casino's brands, including Monoprix, Monop, Geant, Hyper Casino, Casino Supermarche, Leaderprice, Viva and Spar by the end of the year. The lockers store Amazon products to be picked up by customers.
Tina Schuler, CEO of LeaderPrice, Casino Supermarches, Geant Casino and Casino Proximites, told a conference call that the deal - whose financial terms were not disclosed - will help Casino "boost traffic and revenues in e-commerce and in stores".
For Amazon, a key attraction was "Casino's dense store network, which it views as a real strength," she added.
Some 3,500 Casino-branded products will also be available on Amazon, while Amazon and Monoprix will extend their partnership on Amazon's Prime Now grocery delivery service outside Paris and into new cities in the next twelve months.
"This co-operation should help Casino further strengthen its e-commerce footprint as part of its goal to generate revenue of 1 billion euros ($1.13 billion) from the sale of groceries online," said Gregoire Laverne, fund manager at Roche Brune Asset Management.
Nevertheless, Casino's shares fell 0.9 percent by 1113 GMT, after Standard & Poor's cut its credit rating on Casino to 'BB- negative outlook', pushing it further into junk territory.
Investment bank Morgan Stanley also kept an "underweight" rating on Casino's shares.
Monoprix, seen by analysts as similar to Whole Foods, started filling orders for subscribers to Amazon's Prime loyalty programme in parts of Paris last September.
This partnership has been closely watched as Monoprix was the first French retailer to agree in March 2018 to sell products via Amazon, causing a stir in the fiercely competitive domestic market.
France is Amazon's third largest market in Europe, after Britain and Germany. Amazon is the e-commerce leader in France with a market share of 17.3 percent, but its grocery market share stands at just 2 percent, according to Kantar data.
The U.S. group, which has run its Amazon Prime express delivery service in Paris since 2016, has made no secret of its desire to launch a grocery delivery service in France as part of its ambitions to expand in food retail.
But the French supermarket sector has powerful incumbents such as Carrefour and Leclerc, operating at low margins and with a dense network of stores.
Earlier this week, Casino said it would sell 12 Casino hypermarkets and 20 supermarkets to Apollo Global Management in a deal worth up to 470 million euros. ($1 = 0.8887 euros)
Reporting by Dominique Vidalon; Editing by Mark Potter and Louise Heavens