UPDATE 1-Talks to sell Thyssen Brazil site could collapse-source
* Thyssen not making headway in talks with suitor CSN -source
* Faring better in talks over Alabama plant -source
* Banks lenient on covenant breach, keep credit line -sources
* Shares down 1.7 pct
By Matthias Inverardi and Arno Schuetze
DUESSELDORF, Germany, Sept 23 (Reuters) - German steelmaker ThyssenKrupp may give up trying to sell its Brazil plant, part of its loss-making Steel Americas business, a person familiar with the matter told Reuters on Monday.
Having tried for more than a year to find a buyer for Steel Americas, which also includes a plant in Alabama, Thyssen is making no progress in negotiations with Companhia Siderurgica Nacional (CSN) over the sale of the Brazilian steel mill, the person said.
It may, however, seek to keep the talks going for the next few weeks, the source added.
The shares reversed earlier gains on the news and traded 1.7 percent lower at 17.20 euros ($23.24) at 1052 GMT
A spokeswoman for ThyssenKrupp said the group was in "far advanced" talks with one bidder over the sale of the two plants that comprise Steel Americas.
She reiterated Thyssen's previous statement that the steelmaker was trying to strike a deal soon.
Officials at CSN were not immediately available to comment outside of regular business hours.
The source said that ThyssenKrupp was making some progress in trying to sell the Alabama site, possibly in a stand-alone deal, but the new owner would have to commit to buying some intermediate products from the Brazil site, which is known as CSA.
Currently steel slabs made at CSA are shipped to Alabama for processing into coil steel for automobiles and other manufactured products.
Separately, creditor banks will not prematurely cancel their 2.5 billion euro revolving credit facility to ThyssenKrupp even though it violated some credit conditions, two sources familiar with the loan talks said.
The banks granted ThyssenKrupp a waiver for breaching its covenants on the syndicated loan maturing in June 2014, helping the company to deal with its strained finances.
Talks on a new credit facility have not yet begun as the banks are waiting for the outcome of the Steel Americas sale, the people said.
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