* Disney continues negotiations with European exhibitors
* Theaters upset over short theatrical release for "Alice"
* Disney looks to spark sales by moving up DVD release
LOS ANGELES, Feb 18 (Reuters) - UK theater chain Cineworld on Thursday said it will play Walt Disney Co's (DIS.N) "Alice in Wonderland," signaling an apparent truce in a dispute over Disney's plans to speed up the release of the film to DVD.
"After much speculation around whether or not major cinema exhibitors in the UK would play the film, Cineworld has reached an agreement with the Walt Disney Company UK," Cineworld (CINE.L) said in a statement. The chain said it will play the film in 150 theaters, including many screenings in 3-D.
Last week, Disney said it asked U.S. and international theater operators to agree to a shorter gap between the debut of its "Alice in Wonderland" theatrical release and the DVD launch, to help spark DVD sales.
Disney continues negotiations with European theater owners who have threatened to boycott "Alice" over concerns a shorter theatrical release will encourage audiences to wait for the DVD release, instead of seeing "Alice" in theaters.
Theater chains have been spending millions of dollars to upgrade facilities to show 3-D films.
"We are extremely pleased to have reached a satisfactory compromise on this matter," Cineworld Chief Executive Steve Wiener said in a statement. Disney declined comment.
Disney is looking to push forward by about a month the DVD release for "Alice," which comes out in theaters on March 5. DVDs are traditionally released 17 weeks after debuting in theaters.
U.S. theater owners have grumbled over the plans, but so far they appear ready to run "Alice".
"Alice" is the most highly anticipated 3-D film release since December's "Avatar" from News Corp-owned (NWSA.O) Twentieth Century Fox. "Avatar" has become the top grossing film of all time with $2.4 billion at worldwide box offices.
"As leaders in 3-D we did not want the public to miss out on such a visual spectacle," Wiener said.
Disney CEO Bob Iger also set off a furor among theater owners in 2005 after saying the time between movie and DVD releases should be shortened to save on marketing dollars and sustain consumer excitement for titles.
The "window" was shortened from about six months to around four months in recent years.
Now other studios are expected to experiment with the release schedule. Industry insiders also expect Comcast Corp's (CMCSA.O) proposed $30 billion joint venture with NBC Universal will pave the way for further innovations such as potentially offering blockbuster films on movie-on-demand channels ahead of their DVD release.
General Electric Co (GE.N) owns 80 percent of NBC Universal.
(Reporting by Alex Dobuzinskis and Sue Zeidler in Los Angeles; Editing by David Gregorio)