UPDATE 1-M.Stanley, MUFG in loan sharing alliance

* New York, Japanese firms initiate loan sharing program

* Loan-sharing program would have more than $100 billion

* Extends existing bank alliance (Adds MUFG comments, updates dateline)

NEW YORK/TOKYO, July 1 (Reuters) - Morgan Stanley (MS.N) and its biggest shareholder, Japan's Mitsubishi UFJ Financial Group (8306.T), have agreed to pool their lending resources under an agreement designed to help win more investment banking business.

The agreement, which expands an existing relationship between the two banking groups, calls for a joint venture to provide loans to companies across North America. Combined loan commitments to U.S. firms would be more than $100 billion.

Last year, at the height of the financial crisis, Mitsubishi UFJ invested $9 billion in Morgan Stanley, making it the U.S. bank's biggest single investor.

Banks often provide low-cost loans to customers and hope to use that lending as a base from which to win more business in other areas, such as securities underwriting and merger advising. They often also provide the loans as a low-cost service to clients who already generate significant business elsewhere.

The venture "provides our clients with even stronger financing capabilities," Morgan Stanley CEO John Mack said in a statement.

The venture could help Morgan Stanley compete better with rivals such as JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N) and Citigroup Inc (C.N), which combined make about two-thirds of U.S. syndicated loans.

Mitsubishi UFJ said the agreement will help its overseas expansion, which has lagged that of major global players. The alliance also covers operations in Asia, Europe, the Middle East and Africa.

MUFG said the alliance is expected to contribute 30 billion yen in gross profit for the year to March 2012.

MUFG shares were up 2 percent in Tokyo on Wednesday, beating a 1 percent gain on the broader Nikkei index .N225. (Reporting by Steve Eder; Editing by Ian Geoghegan)