UPDATE 2-Ford plans to sell Mazda shares - source

(Recasts with source information)

TOKYO, Oct 11 (Reuters) - Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) is considering selling its stake in Japan's Mazda Motor Co (7261.T: Quote, Profile, Research, Stock Buzz), a source familiar with the matter said on Saturday, as debt-laden U.S. automakers struggle with weakening auto sales and the global credit crunch.

Japanese broadcaster NHK said earlier that Ford, which has 33.4 percent of Mazda, was considering selling about 20 percent and had already approached Japanese companies for the sale, adding Mazda would likely buy some of the shares.

The source did not specify how many shares Ford wanted to sell. Mazda has a market capitalisation of about 408.5 billion yen ($4.1 billion), which would value Ford's entire stake at around $1.36 billion.

Slowing auto sales and the global financial crisis have sent shares of Ford and its U.S. rival General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz) plunging, with investors questioning their turnaround plans.

Ford Chief Executive Alan Mulally on Friday ruled out a bankruptcy filing, saying the No. 2 U.S. automaker was focused on its turnaround and managing its cash "very, very carefully" as the market slowdown in the United States spreads to Europe and Asia.

NHK did not name the Japanese firms involved or specify what stage talks were in. Mazda is Japan's fifth-largest automaker by global output after Toyota (7203.T: Quote, Profile, Research, Stock Buzz), Honda (7267.T: Quote, Profile, Research, Stock Buzz), Nissan (7201.T: Quote, Profile, Research, Stock Buzz) and Mitsubishi (7211.T: Quote, Profile, Research, Stock Buzz).

Ford, which posted an $8.7 billion net loss in the second quarter, has stepped up plans to convert some truck production in North America to build more fuel efficient cars and bring over European-designed vehicles under a global production strategy.

The automaker's U.S. sales dropped 17 percent through the first nine months of the year, in a decline led by lower sales of large trucks like its market-leading F-Series pickups.

General Motors (GM.N: Quote, Profile, Research, Stock Buzz) has been in preliminary talks about acquiring fellow U.S. automaker Chrysler LLC, but the talks were suspended due to the upheaval in financial markets, the Wall Street Journal reported late on Friday.

GM on Friday also ruled out seeking bankruptcy protection.

Ford shares dropped to their lowest in 26 years on Friday amid the global financial crisis. The stock was down 8 cents at $2.00.

Mazda officials were not immediately available for comment. (Reporting by Nobuhiro Kubo, Taiga Uranaka; Editing by Kim Coghill)