UPDATE 2-Fujitsu, Siemens in talks over future of JV

(Adds confirmation from Fujitsu)

By Jens Hack and Mayumi Negishi

MUNICH/TOKYO, July 11 (Reuters) - Siemens AG (SIEGn.DE) and Fujitsu Ltd (6702.T) are in talks over the future of their Fujitsu Siemens Computers (FSC) [NIXG.UL] joint venture, a spokesman for Fujitsu said on Friday.

One source in Japan and another in Germany previously told Reuters that Siemens officials had been in Japan to visit Fujitsu but said that talks over terms of the agreement may drag on until the end of the year.

The spokesman said a decision on the matter had not yet been made.

The German-Japanese venture will be automatically extended for another five years from 2009 if neither partner gives notice this year that it wants to get out.

The German source and another close to the matter in Germany said Siemens will probably cancel the contract in autumn as a precautionary measure, but that it was not clear what would become of the joint venture in the end.

"If Siemens were to decide to pull out, Fujitsu would most likely be unwilling to buy Siemens's stake, given the business climate. Fujitsu's brand by itself is not enough to carry in Europe, where the popularity of low cost models has meant tough price competition," the source in Japan said.

Siemens declined to comment.