UPDATE 1-Morocco extends tax break to boost bourse listings

* Seeking to double number of listed companies

* Wants to be second ranked market hub after South Africa

* Aims to list first foreign company next year (Recasts, adds detail)

CASABLANCA, Jan 15 (Reuters) - Morocco has extended tax breaks for firms on the Casablanca bourse for three years to back its drive for more listings.

Business leaders and market analysts doubted the incentive would be extended beyond last December because the government needs cash to plug a widening budget deficit.

The government expects the economy to grow by 3.5 percent this year from an estimated 5 percent last year.

Morocco wants to double company listings over the next four years to 150 and lift the number of individual investors to 500,000 from about 120,000 to become Africa's second ranked stock market hub after South Africa.

"The government has renewed the tax incentives for listed companies for three years. As a result listed firms will pay upto 50 percent less tax on profit," exchange head Karim Hajji said on Friday.

Hajji said average annual investor returns on the Casablanca bourse were 15 percent over the 10 years to 2009 and market capitalisation grew five times.