UPDATE 2-TD Bank eyes smaller deals to build U.S. presence

* Looking at smaller, FDIC-assisted deals

* No appetite for big deals in current environment

* Sees no rapid rebound in U.S. economy (Adds details; in U.S. dollars unless noted)

TORONTO, Feb 3 (Reuters) - Toronto-Dominion Bank (TD.TO) is interested in U.S. acquisitions of banks with assets under $10 billion, but has no appetite for larger deals until the economy south of the border shows some real improvement, the head of Canada's second largest bank, said on Wednesday.

The rebound in the U.S. economy will likely be a long, tough slog, and U.S. banks still have a way to go to work through their issues, Chief Executive Ed Clark said at a Morgan Stanley conference in New York.

"When I look at the U.S. base case, I say that base case is pretty tepid in terms of what the economic outlook is, and it has no room for accidents," he said.

"And so, I think large acquisitions -- $80 billion to $100 billion asset acquisitions, unassisted -- we don't have much appetite for that. It would be unlikely in 2010."

Clark said TD Bank was looking at smaller, Federal Deposit Insurance Corp-assisted deals of under $10 billion to help expand its U.S. presence.

"They are small enough that we can take the hit if we have to," he said.

TD, which has a strong presence in the U.S. Northeast, has previously said it is most interested in expanding its geographic footprint down the East Coast.

Clark added that TD's commercial real estate portfolio has managed well through the downturn.

($1=$1.06 Canadian) (Reporting by Andrea Hopkins and John McCrank; editing by Rob Wilson)