(Reuters) - Terex Corp (>> Terex Corporation), the U.S. crane maker that has received a $3.3 billion acquisition offer from China's Zoomlion (>> Zoomlion Heavy Industry Sci & Tch Co Ltd), said on Friday it had halted all work on its integration with Finland's Konecranes Abp (>> Konecranes Abp).

While Terex has made no decision on whether it will abandon its agreed merger with Konecranes, the move is the clearest indication yet that it views a sale to Zoomlion as a realistic alternative despite concerns such a deal could be blocked by the United States on national security concerns.

Terex, a Westport, Connecticut-based crane maker, has 97 so-called priority-rated contracts with the U.S. government that could attract scrutiny from the Committee on Foreign Investment in the United States (CFIUS). It also provides mobile harbor cranes in ports that are seen as a critical part of U.S. infrastructure.

"Given the uncertainties involved with the merger and proposed acquisition (by Zoomlion), the decision was made to halt information sharing, work on integration, and synergies between the businesses, until further clarity can be had on the course of action," Terex said in a statement after Reuters reported on the cessation of integration work, citing sources.

Financial and antitrust filings regarding Terex's merger with Konecranes that are in the works will continue unaffected, Terex added, emphasizing that it had not so far changed its recommendation on the merger with Konecranes.

Zoomlion and Konecranes did not immediately offer comment.

Zoomlion has offered $30 per share in cash for Terex, versus the Konecranes offer of 0.8 share for each Terex share which Terex shareholders stand to receive under the deal that was agreed upon in August.

Terex shares jumped as much as 9 percent after the news of the halt in Konecranes integration work, and were still up 4.2 percent at $23.02 in early afternoon on the New York Stock Exchange on Friday. Konecranes shares ended trading down 5.3 percent at 20.20 euros ($22.5) in Helsinki.

CFIUS REVIEW

A formal CFIUS review of Zoomlion's acquisition of Terex would likely take up to 75 days, according to people familiar with the matter. Terex has not informed Zoomlion how long it will take to make a decision on its latest proposal, the people added.

While Terex disclosed Zoomlion's approach on Jan. 26, Zoomlion first reached out to Terex to express interest at the start of the fourth quarter of 2015 and made its latest offer on Dec. 4, according to the sources. Zoomlion does not plan to go hostile with its bid for Terex should it be rebuffed, the sources added.

The financing commitments Zoomlion has received for the transaction are valid for the entirety of the potential CFIUS review, until the deal closes, and include commitments from Chinese banks, according to the sources.

The Province of Hunan and Hony Capital, which together with management own about 30 percent of Zoomlion's shares, both support the Terex transaction, the people added.

Earlier this week, U.S. Representative Duncan Hunter, a member of the House Committee on Armed Services, raised concerns about a possible Zoomlion-Terex deal in a letter to U.S. Treasury Secretary Jack Lew, citing the Chinese company's longtime association with China's People's Liberation Army.

"People may think, 'Oh Terex builds cranes, it does not really impact our national security,'" said Stephen Cheney, a retired Marine Corps general who is chief executive of the American Security Project, a public policy and research organization.

"But it really does, the company has huge defense industry ties, and if you are positioned in U.S. bases and stations and you watch the movements of troops and what is going on in those bases, you are really allowing them access to classified information they should not have and could exploit," Cheney added. "It is very problematic in my view."

U.S. companies also worry increasingly about how CFIUS will view Chinese acquirers. Fairchild Semiconductor International Inc (>> Fairchild Semiconductor Intl Inc) on Tuesday rejected an offer from China Resources Microelectronics Ltd and Hua Capital Management Co Ltd on concerns that CFIUS would reject the deal.

(Reporting by Greg Roumeliotis in New York; Editing by Bill Rigby and Matthew Lewis)

By Greg Roumeliotis