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By Jack Kaskey and Manash Goswami

March 15 (Bloomberg) -- Shares of Dow Chemical Co., the largest U.S. chemical maker, surged as much as 6.6 percent on speculation the company will form a joint venture with India's Reliance Industries Ltd.

Dow, based in Midland, Michigan, rose $2.78, or 6.4 percent, to $46.16 at 10:26 a.m. in New York Stock Exchange composite trading. A close at that price would mark the biggest jump since October 2002. Earlier, the shares reached $46.26. Before today, the stock had gained 8.7 percent this year.

A venture with Reliance may be announced by the end of this week, India's Economic Times reported, without saying where it got the information. Dow spokesman Andrew Wood and Tushar Pania, spokesman for Mubai-based Reliance, declined to comment.

Dow Chief Executive Officer Andrew Liveris said on Jan. 26 he is seeking to reduce wide swings in earnings by moving polypropylene and polystyrene assets into ventures with partners that have access to cheaper raw materials. Reliance, with interests in oil refining, natural gas and chemicals, needs a partner to help sell synthetic fibers outside India.

``There are a lot of synergies in Reliance and Dow coming together,'' said R.K. Gupta, who overseas $68 million at Credit Capital Asset Management in New Delhi. ``Reliance gets access to a well-established marketing and distribution network, and they can also sell Dow's specialty products.''

Dow is the world's largest maker of polystyrene, a hard plastic used in packaging and Styrofoam, with 13 percent of global production capacity, according to Banc of America Securities.