CORRECTED-UPDATE 1-Japan utilities to pay 25% more for '07 coal

(In Oct. 3 story, corrects headline to show deals were for coal for the remainder of 2007, not for 2008; corrects dateline to show story was issued Oct. 3, not Oct. 2; corrects lead and story throughout to show deals were for coal for the remainder of 2007, not for 2008; adds Peabody comment paragraph 2)

SYDNEY, Oct 3 (Reuters) - Some Japanese utilities have agreed to pay the Australian unit of Peabody Energy Corp (BTU.N) about $68 a tonne for remaining 2007 thermal coal contracts, some 25 percent higher than contracts earlier in the year, Peabody said Wednesday.

"This obviously has very favorable implications for forward year pricing," said Vic Svec of Peabody.

Negotiations for 2008 contracts between Japanese utilities and major producers such as Peabody, Xstrata Coal (XTA.L) and Rio Tinto (RIO.AX) (RIO.L) are still continuing, sources from utilities and coal producers said.

Coal for delivery in 2008 reached $72.85 a tonne on Monday on globalCOAL's NEWC index, bolstered by expectations of a supply shortage during the peak northern hemisphere winter heating season that could worsen into 2008.

Traders and producers said the utilities may be making a wrong move by waiting, as prices were poised to climb higher in coming weeks as the market begins to feel the impact of the 2.2 million tonnes lost due to a cut in export allocations by Australia's Newcastle port.

Some Japanese utilities, such as Chubu Electric (9502.T), have two annual contracts. The bulk of coal orders are set in main contracts for the Japanese fiscal year of April to March, while the second contracts run from October to September. (Additional reporting by Osamu Tsukimori in Tokyo)