UPDATE 1-Munich Re says no plans to limit capacity in 2010

* Will continue to provide "substantial" capacity to clients

* No plan to restrict liability limits if prices appropriate

* Sluggish economy keeping insurance premiums under pressure

* Sees big rises in premiums for natural catastrophe cover

* Munich Re share edges up, outpaces index

(Adds detail, background, shares)

BADEN-BADEN, Germany, Oct 26 (Reuters) - Munich Re (MUVGn.DE) will provide "substantial" reinsurance capacity to the insurance industry for risk protection in 2010, it said on Monday.

"Assuming appropriate prices, terms and conditions, there are no plans to restrict liability limits," it said in a statement released as annual contract talks between reinsurance companies and their insurance company clients get underway in this spa and casino resort town in southwest Germany.

The contracts cover the terms and prices under which reinsurers will shoulder any damage claims from events like earthquakes, fires or hurricanes that insurers may face in 2010.

"While economic conditions have improved markedly in 2009, insurance premiums nevertheless remain under pressure due to dampened economic development and reduced purchasing power," Munich Re said.

The world's biggest reinsurer also said it expected to see a significant rise in premiums for natural catastrophes and capital intensive business for next year's risk cover contracts, and sideways movement in other segments.

Munich Re's share rose 0.2 percent to 110.71 euros by 0909 GMT, outpacing a 1.3 percent drop in the DJ Stoxx insurance index .SXIP.