UPDATE 1-Italy prosecutors want Parmalat US deal cancelled

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PARMA, Italy Feb 28 (Reuters) - Italian prosecutors have asked for the board of Parmalat to be removed and its $900 million acquisition of a U.S. dairy group last year to be cancelled.

Parmalat, majority owned by French cheesemaker Lactalis, is facing both criminal and civil legal inquiries into last May's intra-group deal.

Prosecutor Gerardo Laguardia told reporters that colleagues had asked a civil court to appoint a judicial administrator to run the Italian dairy company for 4-5 months, replacing the current board of the company.

Laguardia told reporters that period would be "needed to implement the necessary actions for the acquisition contract of Lactalis in the United States to be declared nul and void."

The inquiries began after a fund manager with a stake in Parmalat complained that its investment had been damaged by the deal that saw the Italian company buy Lactalis American Group.

Parmalat shares, which have risen nearly 40 percent since January, initially fell five percent on the report but swiftly recovered to trade little changed at 1.83 euros.

Parmalat chairman Franco Tato had earlier on Thursday denied that there were plans to delist the company which is 83 percent owned by Lactalis after a 4.3 billion euro takeover in 2011.

Parmalat, a well known Italian food brand, collapsed in 2003 in the wake of a huge accounting fraud before being reformed.

Parmalat had no immediate comment on the report.

Parmalat has repeatedly said that the transaction was carried out in accordance with the law and was motivated by prospects of expansion in the growing North American market.

Under Italian law, a civil court can order an inspection at a company to assess eventual irregularities in managing the business. If it suspects that serious violations persist, can revoke the management and name a temporary special administrator.

The civil court of Parma will have to decide whether to accept or reject the prosecutor's request, with a decision expected by Friday.

(Reporting by Valentina Accardo in Parma and Antonella Cinacio in Milan, writing by Silvia Aloisi; editing by Keith Weir)