UPDATE 1-Daimler still seeking to sell Chrysler stake

* Daimler says welcomes any initiative to stabilise Chrysler

* Says German state guarantees for finance arm an option

(Adds quotes, background, share price)

FRANKFURT, Jan 20 (Reuters) - Daimler AG (DAIGn.DE) still wants to sell its nearly 20 percent stake in U.S. carmaker Chrysler, a spokesman for the German group said on Tuesday amid speculation Fiat (FIA.MI) would join forces with Chrysler.

"We are still trying to divest our 19.9 percent stake in Chrysler," the spokesman said but he declined to discuss to whom it wanted to sell the holding.

It has been in talks with private equity group Cerberus Capital Management [CBS.UL], which bought the rest of Chrysler in 2007.

The spokesman declined comment on prospects for a combination of Fiat and Chrysler other than to say: "We welcome any initiative that serves to stabilise the situation at Chrysler and preserve jobs at the company."

Daimler is not ruling out the idea of seeking German state guarantees for its finance arm, he added, noting the company did not want to be at a competitive disadvantage should rivals make use of the programme for their financing operations.

Volkswagen (VOWG.DE) has already applied for such guarantees and BMW (BMWG.DE) has said it is considering the idea.

Daimler shares gained 2.9 percent to 23.95 euros by 0923 GMT, outpacing a 1.2 percent rise in the DJ Stoxx European car sector index .SXAP. (Reporting by Michael Shields)