(Adds XP Power comment in paragraph 4, details on offer in paragraphs 6 and 7, analyst comment in paragraph 8)

May 21 (Reuters) - XP Power shares surged as much as 50% on Tuesday after the power converter solutions provider rejected a 468 million pound ($594.7 million) possible all-cash offer from Colorado-based Advanced Energy Industries .

Shares in Singapore-based XP Power hit their highest level in more than 10 months at 1,750 pence, leading gains on the FTSE Small Cap index.

The 1,950 pence-per-share conditional, indicative proposal represents a premium of about 68% to the XP stock's Monday closing price.

"The board considered the indicative proposal carefully... and unanimously concluded that the indicative proposal fundamentally undervalues the company and its prospects," XP Power said in a statement.

This marks the third proposal from Advanced Energy for the London-listed firm.

In October last year, Advanced Energy made an all-cash 1,700 pence-per-share offer, and sweetened it to 1,850 pence the following month.

The latest proposal was made on May 7, Advanced Energy said, reflecting the increased number of shares following XP Power's fundraising in November at 1,150 pence per share.

Peel Hunt analysts wrote in a note that the latest offer was "attractive", particularly to those shareholders who entered at 1,150 pence in the recent issue.

($1 = 0.7869 pounds) (Reporting by Aby Jose Koilparambil in Bengaluru; Editing by Devika Syamnath)