WARSAW, July 7 (Reuters) - PKO BP, Poland's top bank, said on Wednesday it plans a 5 billion zloty ($1.5 billion) bond issue which analysts say could be used to help finance an expected bid for Allied Irish Banks' Polish arm.

Poland, seeking to reduce foreign involvement in its banking system, has come out in favour of PKO's likely offer for 70 percent of BZ WBK, which Allied Irish put up for sale under pressure from the Irish government to boost its capital.

Analysts have speculated that several large foreign lenders also placed preliminary offers by last week's deadline, including Italy's UniCredit and Intesa SanPaolo, Spain's Santander and France's BNP Paribas.

None of the banks has confirmed placing preliminary offers and Allied Irish has also declined to comment.

"What PKO really wants to do is show Allied Irish that it has the means to fund the transaction," said IDMSA brokerage analyst Michal Sobolewski.

Analysts said a bond issue would be favoured over conducting a second cash call in less than a year, which could dilute shareholders' investments.

PKO said in a statement the 10-year bonds would be issued by the end of the year. The lender had put off a planned eurobond issue that was to be worth up to 1 billion euros ($1.34 billion).

BZ WBK has a market capitalisation of $4.3 billion, which would value Allied Irish's holding at $3 billion.

Under Polish law, an investor surpassing 66 percent of a listed company must bid for the rest of its shares, although analysts speculate that PKO could seek to avoid the extra expense.

By 0805 GMT, shares in PKO fell 1.4 percent, while BZ WBK was nearly flat. Warsaw's main WIG20 index lost 0.9 percent.

Poland's treasury ministry, which oversees state assets and has indicated strong support for PKO's likely bid, declined to comment.

(Reporting by Patryk Wasilewski and Maciej Onoszko; Writing by Chris Borowski; Editing by Michael Shields)