HELSINKI (Reuters) - Finnish Prime Minister Juha Sipila's conduct is to be reviewed by the parliamentary ombudsman for a possible conflict of interest in government funding for a state-owned nickel mine, the watchdog said on Monday.

Complaints were made after Finnish media reported last week that the engineering company Katera Steel, owned by Sipila's relatives, had received a half-million-euro order from the state-owned nickel company Terrafame shortly after Terrafame unexpectedly received a cash injection from the government.

Sipila has denied any impropriety and on Sunday told reporters that he had not been aware of the Katera order when the financing decision was made. His office has also asked another watchdog, the government's Chancellor of Justice, to review the case.

"The financing decision was based on proposals by Terrafame and the Ministry for Employment and the Economy. There was nothing about subcontractors in them," he told the broadcaster YLE in a radio interview.

Sipila, a millionaire businessman with a background in telecommunications, added that he had given up all his business activity before entering politics to avoid conflicts of interest.

The order was made just weeks after Sipila's center-right government proposed about 100 million euros ($109 million) of new funding for the former Talvivaara nickel mine.

The government took over the mine last year, and founded Terrafame to run it, after production problems, environmental damage and a drop in nickel prices pushed its owner, Talvivaara, into a debt restructuring.

The decision to provide more money marked a U-turn for the austerity-minded government, which said in May that it would start closing the mine if a private investor was not found by the end of the year.

The state has so far injected about 500 million euros into the mine.

(Reporting by Tuomas Forsell; Editing by Kevin Liffey)