UPDATE 1-Nissan to recall 204,361 vehicles

(Adds Continental supplied component)

DETROIT, Oct 15 (Reuters) - Nissan Motor Co Ltd (7201.T) plans to recall 204,361 vehicles from its 2007 and 2008 model years in the United States due to the possibility that a passenger side airbag could fail to deploy properly in an accident.

The voluntary recall covers 2007 and 2008 Nissan Altima, Altima Coupe, 350Z, Murano and Rogue; and Infiniti G35 Sedan, G37 Coupe and EX35 built from March 12, 2007 to May 27, 2008, the company said in a notice to the U.S. National Highway Traffic Safety Administration.

Nissan said it began to investigate the issue in November 2007 after receiving several warranty reports of airbag warning lamps flashing. In late September, Nissan determined that a safety-related defect existed and it should conduct a recall.

In some vehicles, the passenger side airbag could fail to receive a proper signal and a supplemental airbag warning light could flash and a status light would illuminate to warn the driver that it is not working properly.

Nissan believes less than 1 percent of the vehicles actually contain the defect. It plans to test the vehicles and replace the hardware if necessary. The recall is expected to begin Nov. 3.

Continental Automotive Systems U.S. Inc supplied the component to Nissan, according to the notice from the highway safety administration. The supplier is a unit of Continental AG (CONG.DE).

The design is unique to Nissan, a Continental spokeswoman said. (Reporting by David Bailey, editing by Richard Chang)