REFILE-UPDATE 1-Clean Air technology to power Volvo engines

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* Volvo Trucks' engines to use dual fuel combustion tech

* Companies to jointly develop products

* Clean Air Power shares rise 14 percent (Adds CEO comments, share movement)

BANGALORE, Jan 5 (Reuters) - Clean Air Power Ltd (CAPC.L) said on Monday Volvo Powertrain (VOLVb.ST) intended to use its dual fuel combustion technology in truck engines to cut fuel costs and reduce gas emissions, sending its shares up 14 percent in morning trade.

The developer of diesel engine technology said they signed a letter of intent, which provides for certain milestones relating to gas substitution levels, emission compliance, performance and durability testing.

Financial details were not disclosed.

They plan to jointly develop products using Clean Air Power's technology and Volvo Trucks expects to market and support the products.

The companies will sign a formal contract in mid-2009 and Clean Air Power will get revenue from Volvo during the project, it said.