UPDATE 2-Nigeria state, Pfizer to settle out of court -lawyers

* Nigeria's Kano state, Pfizer reach broad agreement

* Details remain to be worked out (Adds quote, background)

By Mike Oboh

KANO, Nigeria, April 3 (Reuters) - Nigeria's Kano state and drugmaker Pfizer Inc (PFE.N) have agreed to the broad terms of an out-of-court settlement in a multi-billion-dollar lawsuit over a 1996 drug trial, lawyers for both parties said on Friday.

The northern state of Kano sued the world's largest drugmaker in May 2007 for $2 billion in damages over the testing of the meningitis drug Trovan, which the authorities say killed 11 children and left dozens disabled.

"I want to report that broad and principal fundamental agreement has been reached between Kano state government and Pfizer," Pfizer's lead counsel in the case, Anthony Idigbe, told reporters after a court hearing.

The New York-based firm has denied all charges and says meningitis, not Trovan, killed the children or damaged their health. It said Trovan saved lives and was as effective as a more established drug used for comparison in the study.

Nigeria's federal government sued for an additional $6.5 billion in 2007 over the drug trial, though sources close to the negotiations have said it is expected to withdraw its case if Kano reaches a settlement.

Sources close to the negotiations told Reuters on Wednesday that the two sides were nearing a $75 million agreement, including the payment by Pfizer of $10 million legal fees, $30 million to Kano state and $35 million to victims and families.