UPDATE 1-Malaysia's Serba Dinamik says KPMG quits as auditor after being sued

(Adds KPMG declining to comment paragraph 4)

KUALA LUMPUR, June 24 (Reuters) - Malaysian oil services firm Serba Dinamik Holdings Bhd said on Thursday it has received notice from its external auditor KPMG handing in its resignation with immediate effect.

In a stock exchange filing, Serba said KPMG stated in the notice dated June 23 that Serba’s lawsuit against it had “compromised their ability to independently continue the audit engagement and discharge their professional duties as auditor of the company”.

Serba said it is currently identifying new auditors for the company.

KPMG declined to comment.

In May, Serba said KPMG had raised concerns about not being able to verify contracts and transactions worth 3.5 billion ringgit ($840.74 million) with 11 customers. ($1 = 4.1650 ringgit) (Reporting by Liz Lee; Editing by Muralikumar Anantharaman)