Embraer mulls development of a larger jet

* Embraer may develop larger jet with more than 120 seats

* Sees demand for 875 regional jets in China over 20 years

SAO PAULO, Nov 4 (Reuters) - Brazil's Embraer is considering whether to develop a slightly bigger commercial plane to target a market niche in between regional jets and the larger airliners made by Boeing Co. and Airbus

"Right now, we think the market is well supplied by the existing models, the (Boeing) 737 and the (Airbus) A320," he added. "So our strategy is to wait a bit, especially to see what kind of engine can be developed for such a project."

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