(Fixes dropped word in last paragraph)
By Danilo Masoni
MILAN, Nov 23 (Reuters) - Italian private equity fund Investindustrial and Indian car maker Mahindra have made competing bids for 50 percent of British luxury car maker Aston Martin with a deal expected over the weekend, a source close to the matter said on Friday.
Investindustrial reached a agreement with Kuwaiti investment house Investment Dar, which owns Aston Martin, on Thursday but afterwards Mahindra made a higher counter bid, the source said.
"They are in talks. A deal is expected to be finalised over the weekend," the source said.
A spokesman for Investment Dar was not immediately available for comment, nor could Mahindra be reached for comment.
The source said Investindustrial had made a bid worth between 200 million and 250 million pounds ($400 million) for the stake and was confident in winning the race because its proposal was "technically" superior.
It said Investindustrial had agreed a technical partnership deal with Daimler AG's Mercedes.
Investindustrial, owned by Italy's Bonomi family, is not new to luxury motor brands. In 2006, it bought Italian motorcycle maker Ducati and sold it for about 860 million euros last April to Volkswagen's Audi division.
($1 = 0.6246 British pounds) (Additional reporting by Amran Abocar in Dubai; Editing by Lisa Jucca and Leslie Gevirtz)