UPDATE 1-Severstal to buy back $400 mln worth of own shares

(Adds details, another Kuznetsov quote, background)

MOSCOW, Sept 16 (Reuters) - Russia's largest steel producer Severstal (CHMF.MM) (CHMFq.L) said on Tuesday it will buy back $400 million of its shares and Global Depositary Receipts in the next 6-10 months, or about 2.8 percent of its stock.

The price is based on Monday's closing price of the company's London-listed GDRs of $14.04, a Severstal statement said. The shares and the GDRs will then be repurchased and held by a subsidiary.

"Today's announcement underlines our confidence in the value of our own business," Severstal's chief financial officer, Sergei Kuznetsov, said in the statement.

"With our financial strength and robust capital structure we are well positioned to complete this repurchase whilst still being in a position to fund our investment programme and take advantage of other value enhancement opportunities."

Severstal is planning to add 5 million to 7 million tonnes of steel capacity by 2012 through a $10 billion-plus investment programme.

Severstal said earlier this month it planned to spend up to $1.4 billion in the next four years to make its U.S. steel mills more competitive. Severstal has 12.5 million tonnes of steel capacity in the United States.

It said it eyed more assets for purchasing to bolster raw material supplies to its U.S. mills and to crack an Asian market.

Severstal posted a record $1.9 billion profit in the first half of 2008 and the company is in talks with banks to raise a loan of up to $2.5 billion.

The company expects 2008 crude steel output of 23 million tonnes, which would be a 31 percent rise on 2007. (Reporting by Aleksandras Budrys; Editing by Hans Peters)