UPDATE 1-Mitsubishi picks Pratt & Whitney for engine -paper

(Adds spokesman comment, details, share price)

TOKYO, Oct 5 (Reuters) - Mitsubishi Heavy Industries Ltd (7011.T: Quote, Profile, Research, Stock Buzz), Japan's largest machinery maker, has picked U.S. firm Pratt & Whitney to supply engines for the passenger jet it expects to launch in 2012, the Nikkei newspaper said on Friday.

The firm will also increase its development budget for the jet by a quarter, to 150 billion yen ($1.3 billion), the Nikkei said.

A Mitsubishi Heavy spokesman declined to comment.

The company said in June that Pratt & Whitney, a unit of United Technologies Corp (UTX.N: Quote, Profile, Research, Stock Buzz), and Rolls-Royce Plc (RR.L: Quote, Profile, Research, Stock Buzz) were possible candidates to supply the engines.

Mitsubishi Heavy plans to start taking orders for the jet next week, when it will also release a detailed business plan, the Nikkei said.

The jet, which will become the first Japanese-made passenger jet, will come in 72-seat and 92-seat versions and is part of a larger effort by Japan to develop aircraft that are more fuel efficient and make less noise.

Shares of Mitsubishi Heavy were up 0.8 percent at 739 yen, compared to a 0.3 percent advance in Tokyo's index of machinery stocks .