UPDATE 1-Toshiba to build lithium-ion battery plant in Japan

(Adds Toshiba confirmation, share price, background)

TOKYO Dec 24 (Reuters) - Toshiba Corp (6502.T) said on Wednesday it would spend tens of billions of yen (hundreds of millions of dollars) to build a lithium-ion battery plant in Japan to meet growing demand, pushing its shares up by as much as 6 percent.

The Japanese electronics maker plans to start producing its Super Charge ion Batteries (SCiBs) at the plant in the fall of 2010 with an initial output capacity of several million cells a month.

SCiBs can be recharged faster than conventional lithium-ion batteries and are less prone to catching fire, the company said.

Toshiba, which competes with bigger rivals Sanyo Electric Co Ltd 6764.T and Sony Corp (6758.T) in the rechargeable battery market, eventually plans to boost monthly capacity at the plant to more than 10 million cells.

The Nikkei business daily reported earlier that Toshiba would spend up to 30 billion yen ($332 million) to build the factory.

The Tokyo-based company already makes SCiBs at another Japanese plant, which has a monthly capacity of 150,000 cells.

A typical battery pack is made up of several battery cells.

Demand for lithium-ion batteries, widely used in mobile phones, digital cameras and laptop PCs, is expected to expand rapidly due to growing use of hybrid and electric vehicles.

Toshiba expects the global lithium-ion battery market to reach 1.7 trillion yen by the year ending in March 2016, and it aims to take at least 10 percent of that market.

Shares of Toshiba pared earlier gains and were up 1.6 percent at 322 yen in early afternoon trade, outperforming the Nikkei average .N225, which fell 2.5 percent. (Reporting by Ted Kerr, Kiyoshi Takenaka; Editing by Chris Gallagher)