UPDATE 2-Fanuc in $949 mln share buyback, Fujitsu may sell

* Fanuc says to buy back 5 pct of shares outstanding

* Fujitsu says could participate, sell Fanuc holding (Adds Fujitsu comment, background)

TOKYO Aug 20 (Reuters) - Japanese industrial robot maker Fanuc Ltd (6954.T) will buy back 89.5 billion yen ($949 million) worth of its shares, and shareholder Fujitsu Ltd (6702.T) said it was considering selling its stake.

Fanuc said it will buy back 5 percent of its shares outstanding at Thursday's closing price of 7,460 yen through the Tokyo Stock Exchange's off-hours share buyback platform before the market opens on Friday.

Fujitsu, Japan's biggest IT services company, holds a 5 percent stake in Fanuc and could try to sell its entire stake, spokesman Takashi Koto said, adding that nothing had been decided.

Fanuc said it wanted to secure flexibility in capital management.

Shares in Fanuc are up 18.6 percent from the start of the calendar year, and a share sale could be a windfall for Fujitsu, which is hurrying to restructure its loss-making chip operations and expand its presence in IT services abroad.

Fujitsu President Kuniaki Nozoe said last month he was unhappy with Fujitsu's capital strength but saw no immediate need to raise capital. Shareholders' equity ratio in Fujitsu was 22 percent at the end of June.

Fujitsu, which hopes to remodel itself after bigger rivals IBM (IBM.N) and Hewlett-Packard (HPQ.N), has gradually whittled away its 38.9 percent stake in Fanuc. ($1=94.31 Yen) (Reporting by Taiga Uranaka, Mayumi Negishi and Nobuhiro Kubo; Editing by Michael Watson)