Continental plans high yield bond this week-sources

* Volume of 500 million to 1 billion euros -sources

* Coupon likely to be below 8 pct -sources

* Bond to help lengthen maturity profile of debt -sources

FRANKFURT, Aug 31 (Reuters) - German auto parts supplier Continental AG (CONG.DE) plans to issue a bond in the next few days with a volume of 500 million euros to 1 billion euros ($630 million to $1.26 billion) to help refinance its debt pile, three financial sources told Reuters.

The coupon is likely to be below 8 pct, the sources said.

A bond issued by Continental a few weeks ago is trading at about 105.5 DE000A1AY2A0=R.

"That gives a yield of about 7 percent and is a good starting point for gauging coupon on any new issue," an analyst said, adding: "There would have to be some kind of premium and it also depends on the size of the issue."

In July, the firm raised 750 million euros at an interest rate of 8.5 percent, which helped spread the maturity profile of its current debt, virtually all of which is due in 2012.

Continental wants to place bonds with a volume of as much as 4 billion euros in total, Continental Chief Financial Officer Wolfgang Schaefer has said. Continental's net debt stood at 8 billion euros -- or 1.3 times its equity -- at the end of June.

Given the attractive coupons, investors expect strong demand for securities like the Continental bond.

Continental also hopes to boost confidence in its creditworthiness among its 50-odd syndicated lenders.

Rated "B" with a stable outlook by Standard & Poor's, Continental plans to merge with its also heavily indebted parent Schaeffler no earlier than next year. [ID:nLDE65R1IG]

For its July bond, Continental mandated Citigroup (C.N) and the Royal Bank of Scotland (RBS.L) to lead a bank consortium that further included Commerzbank (CBKG.DE), Deutsche Bank (DBKGn.DE), ING (ING.AS), Landesbank Baden-Wuerttemberg [LBBW.UL] and UniCredit (CRDI.MI).

Continental declined to comment.

(Reporting by Jan Schwartz in Hamburg, Arno Schuetze in Frankfurt, Zaida Espana and Natalie Harrison in London)