UPDATE 2-Putin pledges steps to support steel sector

* Putin vows to stimulate domestic demand, promote exports

* Says local producers affected by China anti-dumping case

* Govt to grant 50 billion rouble to rail monopoly in 2010

* Evraz stock outperforms peers

(Adds details, additional quotes)

By Gleb Bryanski

MAGNITOGORSK, Russia, July 24 (Reuters) - Prime Minister Vladimir Putin pledged on Friday to help Russia's steel sector by stimulating demand for metal and taking steps to offset protectionism in other countries.

"Our domestic output is being discriminated against, in reality we see such policies widening in certain countries," Putin told a meeting with top Russian steel barons.

As the prime minister and Industries Minister Viktor Khristenko gave proposals to support the crisis-hit sector, analysts said more concrete measures were neccessary.

"The fact that some ideas were presented is positive, but we need more concrete details on how this will be carried out," Deutsche Bank analyst Olga Okuneva said.

"Right now all of these need to be turned into concrete measures to stimulate demand for steel".

Steel makers in Russia, the world's fourth-largest producer, have suffered from a decline in orders from the construction and automotive sectors as the global economic slowdown cuts demand.

In response they have boosted exports, though this has led to a growing threat of tariffs and other anti-dumping measures against Russian steel by Chinese and other buyers. [ID:nL9599127]

Thus far, China's sole move has been a June investigation into Russian and U.S. electrical steel, though a recent Citibank report cited industry newsletters reporting Beijing had also order a probe of Russian flat steel imports.

"The Chinese investigation into transformer steel is mainly against American companies, but Russian companies also suffer," Industries Minister Viktor Khristenko told the meeting.

Most of Russia's leading steel barons attended the roundtable in the Urals steel town of Magnitogorsk, including Mechel's (MTL.N) controlling shareholder Igor Zyuzin, who called in sick last year.

Putin then delivered a sharp criticism of the company's coking coal pricing policy and threatened to send a doctor to visit Zyuzin.

The company's shares dropped more than 36 percent on July 24, 2008, and now trade far below last year's levels.

Zyuzin did not speak at the Friday meeting and appeared visibly nervous while taking notes on the presentations.

PROPOSALS

In addition to providing assistance to Russian exporters, Putin said the government wants to stimulate demand in the home market through unspecified measures.

"We will stimulate market demand and increase orders from end-users," Putin said.

Several steel executives made more specific requests.

Magnitogorsk Iron & Steel Works Chairman Viktor Rashnikov, who hosted the meeting, asked the government to restore a tax break under which 50 percent of profits spent on investment went untaxed.

Severstal's (CHMFq.L) controlling shareholder also requested Russian government assistance in fighting anti-dumping actions.

While the prime minister did not offer any direct aid to steel producers, he did say that a 50 billion rouble subsidy would be granted to the RZhD railway monopoly in 2010 as compensation for losses created by low rail tariffs.

The shares of Ervaz HK1q.L, a big supplier of rail, closed 3.5 percent up in London outperforming other Russian steel stocks.

(Reporting by Gleb Bryanski, writing by Alfred Kueppers)