* GM Canada to cut about 42 percent of its dealerships

* Says focusing rationalization efforts on urban markets

* Industry Minister says GM needs CAW deal soon (Adds confirmation from GM that dealers notified)

By John McCrank

TORONTO, May 20 (Reuters) - General Motors of Canada GM.N informed its dealerships on Wednesday of which ones it will close as part of a plan to slash its dealer network by nearly half, one of the steps necessary to qualify for long-term government aid.

GM, which is restructuring ahead of a June 1 deadline to qualify for a U.S. and Canadian government rescue package, said it has identified which dealers' sales and service agreements will not be renewed following their expiration in October 2010.

GM has about 700 dealerships and retailers across Canada.

"Due to the unique aspects of our Canadian dealer network, we have focused our network rationalization efforts on key urban markets in an effort to achieve a viable network configuration all across Canada," the company said in a statement.

"The end result in Canada will be a more competitive dealer network with higher volumes."