UPDATE 1-EDF, Areva reach deal on used nuclear fuel

* Two groups plan to sign contract by end of Q1 2010

* Deal covers transportation, treatment and recycling (Adds details from statement, background)

PARIS Feb 5 (Reuters) - French energy giant EDF (EDF.PA) and nuclear specialist Areva CEPFi.PA said on Friday they had reached an agreement on used nuclear fuel management after the state stepped in to mediate fraught talks.

The two state-controlled firms -- whose chief executives are locked in a public spat -- were on Jan. 20 given a two-week deadline by the French government to resolve their differences over how to apply a 2008 framework agreement on nuclear waste.

French prime minister Francois Fillon on Friday said in a statement that he was pleased with the deal.

Strategy disagreements between EDF head Henri Proglio and Anne Lauvergeon, Areva's CEO, turned to public hostility earlier in January when Areva briefly halted fuel deliveries to and collection of waste from EDF after a deadline to renew their contract expired. [ID:nLDE60J2C0]

The two companies said in a statement on Friday they would sign a contract covering transportation, treatment and recycling of used nuclear fuel before the end of March. The agreement reached by the two groups lays out conditions for applying the framework agreement of Dec. 19 2008, which set out a partnership covering treatment-recycling of used fuel, and reprocessed fuel fabrication, the firms said.

"This guarantees both EDF and Areva long-term visibility on their recycling partnership," they added.

The firms agreed that EDF will increase the amount of used fuel sent for treatment to the Hague, where Areva has a dedicated storage site, to 1,050 tonnes from 850 tonnes a year.

"As regards the enrichment of EDF uranium on Areva's Eurodif (uranium enrichment) site, Areva and EDF are currently doing all they can to quickly reach an agreement," the companies said.

Prime Minister Fillon said he was pleased that negotiations between the two companies on enrichment had progressed, and added that the discussions should soon lead to an agreement. (Reporting by Helen Massy-Beresford; Editing by Bernard Orr)