(recasts with Muddy waters reaction)
By Dominique Vidalon and Sudip Kar-Gupta
PARIS, June 6 (Reuters) - U.S. short-selling firm Muddy Waters on Thursday rejected the preliminary findings of a probe by France's AMF financial regulator into its criticism of retailer Casino.
"We vehemently disagree with the preliminary conclusions of the AMF investigation team, which we believe are tainted by bias," Muddy Waters said in a e-mailed statement.
Newspaper Le Monde reported earlier on Thursday that the AMF regulator suspects Muddy Waters of "deception" regarding supermarket retailer Casino whose shares have been hurt by Muddy Waters' negative comments.
Reuters did not see the AMF preliminary report Le Monde and Muddy Waters were citing. Casino declined to comment. "Our research on Casino and Rallye has proven prescient and accurate, with any suggestion to the contrary lacking credibility...If necessary, we will defend our right to free expression and to criticize," it added.
An AMF spokeswoman said, "inquiries have been opened, looking at both the stock price movements and the release of financial information. Procedures are under way and the AMF will not comment on either the content, nor the state of progress, of these matters."
In 2015, Muddy Waters criticised Casino's complex structure and accounting practices, saying it had high leverage and was managed for the short-term.
The AMF launched a probe into this criticism in early 2016 and a conclusion was expected this year.
Casino has consistently refuted Muddy Waters' accusations.
Casino's parent Rallye was placed under protection from creditors last month, which Muddy Waters said at the time was "a resounding vindication of the warnings we sounded."
Criticising France as "an unwelcoming place for investors who are also whistleblowers", it added then: "We encourage the AMF to redirect its focus from skeptics and focus instead on their warnings."
Casino has been grappling with large debts and a tough business environment, and has suffered credit ratings downgrades from Standard & Poor's and Moody's.
Casino is Rallye's main asset. Rallye is controlled by Fonciere Euris, Finatis and Euris, which are all in the hands of Casino chairman and CEO Jean-Charles Naouri. (Reporting by Dominique Vidalon, Sudip Kar-Gupta and Pascale Denis; Editing by Leigh Thomas)