* GIP first party to confirm bid for London airport
* Germany's Hochtief also says it has submitted offer
* Sources say Deutsche/Babcock & Brown will bid
* BAA says first round bids for Gatwick due on Monday
(Recasts, adds Hochtief comment, detail)
By John Bowker and Quentin Webb
LONDON, Jan 19 (Reuters) - The owners of London City and Budapest airports have both submitted offers to buy Gatwick from Spain's Ferrovial on Monday, ahead of a deadline for first-round bids for Britain's second-busiest airport.
Global Infrastructure Partners (GIP), a joint venture between General Electric and Credit Suisse and owner of London City airport, was the first party to confirm a definite bid for Gatwick, which was put up for sale last year.
"I can confirm a bid is going in today, and will be by the deadline," a GIP spokesman told Reuters, although he would not say how much was being offered or whether GIP had any bidding partners.
Germany's Hochtief, the owner of Budapest airport, later told Reuters it too had submitted a bid, also without adding further detail.
Sources familiar with the matter told Reuters Deutsche Bank's RREEF Infrastructure will make an approach in partnership with Australia's Babcock & Brown.
Both RREEF and Babcock & Brown declined to comment.
Gatwick is part of Ferrovial's seven-airport monopoly BAA, which Britain's competition regulators have proposed should be broken up. Analysts have said the Gatwick sale could net its debt-laden owner up to 2 billion pounds ($2.95 billion).
A spokesman for Ferrovial's British airports arm BAA said first-round bids for the airport were due later on Monday, but declined to comment further on the process.
BAA Chief Executive Colin Matthews told reporters last week that there had been "serious interest" in Gatwick, which has about 35 million passengers a year.
A string of other consortia are expected to follow GIP and Hochtief into the bidding contest.
HSBC and Royal Bank of Scotland are running the sales process. Sources close to BAA said the two banks would be willing to give credit of up to 1.6 billion pounds to a potential buyer as long as it met certain criteria.
Manchester Airport Group and 3i Infrastructure have both said they would look at a bid, although neither would comment further on Monday.
Press reports have said a fund run by Citigroup is also a leading contender. However, Frankfurt Airport-owner Fraport told Reuters on Monday it would not be making an offer.
TRAFFIC IN FREEFALL
The potential value of bids has been estimated at about 2 billion pounds, but analysts have cautioned that achieving a premium to the Regulated Asset Base (RAB) -- a way of valuing infrastructure assets -- of 1.7 billion pounds may be difficult.
"It remains to be seen whether 2 billion pounds will be achievable ... given that traffic at the airport is in freefall and given the continuing difficult state of the credit markets," Collins Stewart aviation analyst Andrew Fitchie said in a note.
BAA said passenger numbers at Gatwick fell 13.8 percent year-on-year in December.
Ferrovial put Gatwick up for sale to pre-empt a likely order to do so by Britain's Competition Commission later this year. In December the Commission also proposed the sale of London's Stansted airport as well as Edinburgh in Scotland.
The Spanish company will be allowed to keep Heathrow, the world's busiest international airport with 65 million passengers a year, and was last week controversially awarded government approval for a third runway. (Additional reporting by Sinead Cruise in London, Angelika Gruber in Frankfurt, Matthias Inverardi in Dusseldorf, Sarah Morris, Carlos Ruano and Andres Gonzalez in Madrid; Editing by Jon Loades-Carter, Hans Peters and Andrew Macdonald)