BEIJING, July 8 (Reuters) - China's state assets watchdog warned centrally-controlled state companies on Wednesday to step up checks over their derivatives trading to avoid potential risks.

The State-owned Assets Supervision and Administration Commission (SASAC) ordered all central government-controlled state companies engaging in trading derivatives to make quarterly reports about their investment situations, according to a statement published on the agency's website (www.sasac.gov.cn).

It said the companies should report their holdings of futures, options, forwards and swaps, and investment performances, to the watchdog within 10 working days of the end of each quarter.

"All central state companies should strengthen oversight of derivatives trading and make a timely analysis of their holdings, capital settlements, new business, gains or losses, hedging activities and risk exposure," it said.

The circular fleshed out a guidance SASAC issued in March to bost controls over derivatives investments by state companies after a series of scandals.

Several state companies have reported huge derivatives losses since last year as the global financial crisis intensified.

Three airlines - Air China 0753.HK , Shanghai Airlines and China Eastern - reported book losses totalling 13.17 billion yuan (S$2.81 billion) as of the end of January on aviation fuel hedging contracts, the official Xinhua news agency said.