UPDATE 4-GM, Chrysler launch U.S.-backed supplier aid

* GM says suppliers to get $2.1 bln via the automaker

* Interested suppliers should contact GM, Chrysler

* Chrysler taps $1.5 bln from government credit

* Shares of parts suppliers rise sharply
(Adds White House confirmation that task force meeting GM,
updates share price changes)

By Soyoung Kim and David Lawder

DETROIT/WASHINGTON, April 8 (Reuters) - General Motors Corp
GM.N and Chrysler on Wednesday launched programs to help
cash-strapped parts suppliers, backed by up to $5 billion in
U.S. government funds.

The news sent shares of major auto parts makers climbing,
with American Axle & Manufacturing Holdings Inc (AXL.N) up more
than 6 percent and ArvinMeritor Inc (ARM.N) up nearly 14
percent.

The U.S. Treasury, which last month pledged up to $5
billion to support battered auto parts suppliers, said the
programs will guarantee receivables owed to the companies for
any parts shipped to GM and Chrysler after March 19.

Chrysler said it would tap $1.5 billion from the government
credit line and provide $75 million of its own capital, under a
requirement that any participating automaker should provide 5
percent matching funds to the government money.

Suppliers deemed critical to GM's operations have been
allocated $2.1 billion to be distributed through the automaker,
with the government supplying $2 billion and GM putting in $100
million, the automaker said.

Citigroup (C.N) is working with GM and Chrysler to
determine how to distribute the funds to suppliers.

"The U.S. Treasury Department is pleased that both GM and
Chrysler have moved quickly to launch supplier support
programs," Treasury spokeswoman Jenni Engebretsen said in a
statement.

"These efforts, backed by U.S. Treasury resources, will
help stabilize the auto supply base and restore credit flows in
a critical sector that employs more than 500,000 American
workers across the country."

Separately, Obama administration officials said on
Wednesday that a White House group that has the task of
reforming the auto industry was meeting General Motors
officials this week and next in Detroit.

"The goal is to accelerate the process that the President
laid out last Monday," the official said, referring to
President Barack Obama's decision to give GM 60 days to develop
a more sweeping restructuring plan.

The companies that supply parts to U.S. automakers are
under severe pressure from the lowest vehicle production in
three decades, and analysts have warned of a wave of failures
in the second quarter, when the near-total shutdown in output
in December and January starts to hit balance sheets.

A disorderly failure of large suppliers would be very
expensive to all major automakers manufacturing in North
America, as the industry is already struggling to survive a
dramatic decline in revenue prompted by a recession.

GM spokesman Dan Flores said they were working to put the
program into operation as quickly as possible, adding: "The
Treasury program recognizes how critical the domestic supply
chain is in keeping America's auto industry running."

GM and Chrysler have relied on $17.4 billion of government
loans to fund their operations since the start of the year.

Ford Motor Co (F.N), the only U.S. automaker operating
without emergency government loans, said last month it had
enough cash for its suppliers so that it did not need to
participate in the government-backed bailout program.

Suppliers interested in participating in the support
program should contact GM and Chrysler, the Treasury said.

Suppliers are required to pay 2 percent to secure a
government guarantee of the receivables they are owed. For a
higher payment of 3 percent, suppliers can opt for immediate
payment from the fund.

American Axle shares were up 9 cents at $1.49 on the New
York Stock Exchange near the close of trading, and ArvinMeritor
shares were up 11 cents at 90 cents.
(Additional reporting by Jeff Mason in Washington; Editing by
James Dalgleish)