A bear naps in his cage at one of the traditional Chinese medicine company Guizhentang's controversial bear bile farms in Hui'an, southeast China's Fujian province on February 22, 2012. Bear bile has long been used in China to treat various health problems, despite skepticism over its effectiveness and outrage over the bile extraction process, which animal rights group say is excruciatingly painful for bears. CHINA OUT AFP PHOTO (Photo credit should read STR/AFP/Getty Images)

By Michael Martina

BEIJING, April 15 (Reuters) - An animal welfare group said on Tuesday it will save 130 bears from a bile extraction farm in China, its largest rescue so far, in a bid to end a business that has sparked outrage over animal cruelty amid growing opposition.

Hong Kong-based Animals Asia says as many as 10,000 bears are held in captivity in China and used for bile extraction, often under poor conditions that cause long-term physical and psychological suffering.

The bile, taken repeatedly from incisions in the bears' gall bladders, is used in some Chinese medicines that claim to cure eye and liver ailments.

Animals Asia reached a deal with state-owned Flower World to take over its bear bile farm in the southern Guangxi region's capital Nanning and convert it into a sanctuary for the Asiatic black bears, known as moon bears for a white crescent marking on their chests.

The deal was agreed to after company executives said they were losing money on the venture and acknowledged it was "time for change".

"Particularly in the last two years, there has been a lot of public discussion about the practice of extracting bear bile from live bears. Most people oppose it, so we consider prospects for the bear bile business will be less and less optimistic," Flower World General Manager Yan Shaohong told reporters.

"Actually, the company has always been investing money but not making any," Yan said.

The company had invested around 8 million yuan ($1.3 million) in the farm that had yet to sell bile. The rescue is set to begin in May and the company stopped extracting bile from the bears two years ago.

Animals Asia said they had put aside $5 million over the next three years to construct and run the sanctuary and retrain staff to care for the bears. Many had been used for their bile, while others had been held for breeding.

Wildlife advocates say that while sales of bear bile are legal in some Asian nations - including mainland China and Japan - any trade across borders is prohibited by the Convention on International Trade in Endangered Species (CITES).

While the bear trade is robust across Asia, there are indications that attitudes are slowly changing.

In 2011, fury among Chinese Internet users erupted after news that a Chinese company that extracts bear bile hoped to list on the stock market. The firm eventually withdrew its public listing application, though it didn't give a reason.

Jill Robinson, Animals Asia founder and CEO, said many of the rescued bears, which can live as long as 30 years, will likely remain at the sanctuary for the rest of their lives.

"This negotiation is a result of years of growing awareness and increased opposition, with the bear farmer showing the moral integrity to do the right thing," Robinson said. (Reporting by Michael Martina; Editing by Nick Macfie)