UPDATE 2-Spain in talks with Mitsubishi on car battery plant

* Electric car battery plant could cost 400 mln euros -media

* PSA, Mitsubishi Motors chiefs met in Vigo last week

* Catalonia says in talks with China's Chery for factory

(Adds PSA comment)

By Robert Hetz and Chang-Ran Kim

MADRID/TOKYO, Sept 2 (Reuters) - Spain is in talks with Japan's Mitsubishi Corp (8058.T) about building a factory for electric car batteries in the northwestern town of Vigo, Spanish Economy Minister Elena Salgado said on Thursday.

The 400 million euro ($512 million) plant could create around 1,500 jobs, Spanish newspapers reported.

Mitsubishi Corp and sister company Mitsubishi Motors Corp (7211.T) operate a joint venture with Japanese battery maker GS Yuasa Corp (6674.T) to develop and produce lithium-ion batteries for electric cars. The venture, Lithium Energy Japan, is 51 percent owned by Kyoto-based GS Yuasa.

Mitsubishi Corp director Mikio Sasaki met Spain's Prime Minister Jose Luis Rodriguez Zapatero in Tokyo on Thursday.

Mitsubishi Motors has a broad-based tie-up with French group PSA Peugeot Citroen (PEUP.PA) that includes a deal for the Japanese automaker to supply electric cars under the two French brands.

Vigo is the PSA's biggest production site by volume.

A GS Yuasa spokeswoman said the company was considering various options for an overseas production site for car-use lithium-ion batteries, but that no decision had been made.

Spokesmen at Mitsubishi Corp and Mitsubishi Motors said they could not confirm or deny the talks with the Spanish government.

PSA Chief Executive Philippe Varin and his Mitsubishi Motors counterpart, Osamu Masuko, met in Vigo last week, a PSA spokesman confirmed.

Spanish paper Atlantico said the two discussed prospects for the battery plant but the PSA spokesman said they met as part of an deal signed in June to look into developing electric vehicle powertrains, initially for use on light commercial vehicles.

"So as part of that agreement the two presidents met to move things along ... it was just to take stock of how it is progressing," the spokesman said.

The two embattled car makers had dropped talks earlier this year to study a capital alliance as they seek to survive intensifying competition in the global auto industry.

The spokesman said on Thursday that these talks had not been revived at the meeting and that "the matter is closed".

Separately, the regional government of the northeastern Spanish region of Catalonia is in talks with Chinese car manufacturer Chery Automobile Co, a regional government spokesman said, to build a 1 billion euro assembly plant.

The spokesman declined to reveal more details about the plans, but Spanish media said the factory could employ up to 11,000 workers.

The factory would be the first European production plant for China's largest independent car maker. (Reporting by Robert Hetz in Madrid and Chang-Ran Kim in Tokyo; Additional Reporting by Helen Massy-Beresford in Paris; Translating by Sonya Dowsett; Editing by David Holmes and Michael Shields) ($1 = 0.7814 euro)