UPDATE 1-Vale cuts Japan bound iron ore price by 28.2 pct-Nikkei

June 11 (Reuters) - Brazilian miner Vale (VALE5.SA) (VALE.N) said it will cut iron ore prices by 28.2 percent for fiscal 2009 shipments to Nippon Steel Corp (5401.T) and other Japanese steel makers, as well as South Korea's POSCO (005490.KS), the Nikkei business daily reported.

Vale had said earlier on Wednesday it had cut iron ore prices to Japan and Korean steelmakers, dealing a blow to revenues but still bolstering its position in talks with Chinese steelmakers seeking even bigger cuts.[ID:nN10315709]

The Japanese steel firms had already agreed to a 33 percent reduction in the price of iron ore supplied by Anglo-Australian resource giant Rio Tinto Plc (RIO.L) (RIO.AX), the paper said.

Nikkei said Japanese steelmakers source about 30 percent of their iron ore from Brazil.

The paper added that the companies accepted a 65 percent price hike by Vale in February 2008 and agreed to a maximum 100 percent hike by Rio Tinto and BHP Billiton last July. Vale demanded an additional hike, but retracted the request as the economy started deteriorating, Nikkei said.

Nikkei said Vale's price reduction is smaller than Rio Tinto's probably because Vale's hike was smaller than that of Anglo-Australian firms in fiscal 2008. (Reporting by Arup Roychoudhury in Bangalore; Editing by Jarshad Kakkrakandy) (arup.roychoudhury@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: arup.roychoudhury.reuters.com@reuters.net))