Formula One will be looking carefully at how markets react to the much larger planned listing of social media company Facebook as it weighs whether to proceed, the source said.

Private equity firm CVC Capital Partners CVC.UL has owned 63.4 percent of the Formula One business since 2006 and wants to cut its stake to under 50 percent.

Investment banks UBS (UBSN.VX), Goldman Sachs (GS.N) and Morgan Stanley (MS.N) have been hired to work on a flotation that could value the global motor racing tour at some $10 billion.

"If the next two weeks are as bad as the last three, it will be unlikely it will go ahead this summer," said the source, speaking in a hospitality area at the track in Barcelona on the eve of the Spanish Grand Prix.

"If markets are on a negative trend every day, it's hard to sell an IPO," he added.

Renewed political uncertainty in the euro zone and a big trading loss suffered by JPMorgan Chase (JPM.N) have unsettled stock markets in recent days.

The MSCI's index of global share market performance has given up much of the gains made earlier in the year. Falls of over two percent in the past week have pushed it back down to levels seen in January.

LOOKING AT FACEBOOK

The new issues market will be dominated in the coming days by Facebook, which aims to raise about $10.6 billion in Silicon Valley's largest IPO.

The source said it would not help Formula One's plans if the Facebook listing flopped but a successful market debut would provide a fillip.

English soccer club Manchester United put plans to float in Singapore on hold last September because of market jitters.

A Formula One flotation could also include a 15 percent stake in the business held by U.S. investment bank Lehman Brothers when it collapsed in 2008.

Formula One has prepared accounts up until the end of December, meaning that failure to get the deal away in June would cause a delay while an updated set of half year figures were produced. The IPO market also tends to go dormant over the northern hemisphere summer.

Formula One's complex internal politics could throw up another hurdle.

The German Mercedes team said this week it needed to reach an agreement on its long-term future in the sport before any flotation could proceed.

Mercedes, majority owned by Daimler (DAIGn.DE), is the only major team yet to sign up to a new version of the secret "Concorde Agreement" that governs the commercial side of the sport.

Formula One commercial chief Bernie Ecclestone was not immediately available for comment.

(Editing by Janet Lawrence)

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