UPDATE 2-GM's Opel seeks bailout from German taxpayers

* GM's unit Opel seeks taxpayer aid * Talks with federal government set for next week * German states home to Opel plants signal willingness

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By Jan Schwartz

HAMBURG, Germany, Nov 14 (Reuters) - General Motors Corp's GM.N Opel unit has asked the German federal and state governments for guarantees to help it weather tough times for the automotive industry, Opel said on Friday.

The move expands GM's search for fresh funding to counter a global market downturn that the biggest U.S. carmaker has said could make it run out of cash early next year.

Opel head Hans Demant said state aid would be invested in product development and assembly facilities in German plants and would not be used outside of Europe.

"We want to secure Opel's competitiveness even in this difficult situation around the world," he added.

A finance ministry spokesman in Berlin said talks were scheduled for next week, and the economy ministry said it was awaiting concrete figures to analyse just how in need Opel was, but the initial reaction from states with Opel plants was generally positive.

"The aim of the current talks is to prepare additional backing for loans because parent company General Motors' global financial situation has deteriorated," Opel labour leader Klaus Franz added.

"We want to assure Opel's future in Europe as well as our jobs. That is why employees support this completely."

The Handelsblatt newspaper quoted government sources as saying the German state of Hesse, home to Opel's German headquarters, was considering providing 500 million euros ($634 million) in guarantees.

Vehicle sales in Europe by Opel and its British sister brand Vauxhall fell by a quarter in October to just over 77,000 units, dropping their market share to 6.8 percent from 7.7 percent a year ago.

With a market share of 7.9 percent in the first 10 months of the year, the two brands combined are number three in the European market behind Volkswagen (VOWG.DE) and Ford (F.N). (Reporting by Jan Schwartz, editing by Will Waterman)