UPDATE 1-Nokia calls report of Microsoft deal "baseless"

* Nokia says report is "100 percent baseless"

* Website says Microsoft will buy phones business for $19bn

* Nokia shares climb back from 10 percent slide on report

* Microsoft shares fall 1.8 percent

(Adds detail and background)

HELSINKI/NEW YORK, June 1 (Reuters) - Shares in struggling mobile phone handset maker Nokia Oyj (NOK1V.HE) jumped on Wednesday in reaction to a web site report that said U.S.-based Microsoft Corp (MSFT.O) had struck a deal to buy its mobile phone business for $19 billion.

Nokia called the report "100 percent baseless."

Nokia shares have been in steep decline in the past two days after its latest failure to deliver on recovery targets.

Dealers said Microsoft shares also fell on the report, which appeared on the web site www.bgr.com, citing a person called Eldar Murtazin, whom it described as an industry insider.

Microsoft and Nokia struck a deal earlier this year under which the Finnish company will move to using Microsoft software in its phones instead of its own Symbian software. Nokia's new CEO Stephen Elop is a former Microsoft executive.

"These rumours are 100 percent baseless," Nokia spokesman Doug Dawson told Reuters.

The shares were 0.8 percent lower at 4.714 euros, having dropped as much as 10.2 percent earlier in an extension of Tuesday's 18-percent slump. Volume in the stock reached six times the 90-day daily average. (Reporting by Dominc Lau in London, with Helsinki and New York Newsrooms; Writing by Andrew Callus; Editing by David Holmes)