UPDATE 1-Cemex in talks with five banks to refinance debt

(Adds bank details, background, previous MEXICO CITY)

MONTERREY, Mexico, Nov 14 (Reuters) - Cemex, the world's No. 3 cement maker, said on Friday it was in talks with five banks to refinance part of its debt.

Cemex (CMXCPO.MX)(CX.N) needs to repay $6.6 billion of debt by the end of 2009, and some investors are concerned it will struggle to refinance amid tight global credit conditions and falling sales volumes in its key U.S. and European markets.

Monterrey-based Cemex said it had chosen Spain's BBVA (BBVA.MC) and Banco Santander (SBP.N), Europe's top bank HSBC (HSBA.L), Britain's Royal Bank of Scotland (RBS.L) and New York-based Citigroup (C.N) to "negotiate joint bilateral facilities" for itself and its Cemex Espana unit.

Additionally, they will help Cemex amend other existing syndicated loans. "If consents are obtained, Cemex would achieve greater financial flexibility by lengthening the maturity of the bilateral and syndicated facilities," said the company, which operates in 50 countries.

Despite company assurances that it will meet its financial obligations by the end of 2009, Cemex shares were trading at 9-1/2-year lows this week on concerns about default.

Sharp declines in sales volumes in Cemex's U.S and European markets have combined with market volatility, a weak Mexican peso and tight credit to create one of the toughest operating environments the company has ever faced.

That has been exacerbated by Cemex's purchase last year of Australia's Rinker, which had big U.S. operations, just as the U.S. housing market was collapsing.

Buying Rinker has increased Cemex's net debt to $16.4 billion. Even though Cemex has reduced its debt by $3 billion since that acquisition, investors say the company is still highly leveraged.

Cemex aims to extend a payment of $446 million in locally-issued debentures to late 2011 and said last month it had won commitments to defer $1 billion of a syndicated loan out to December 2010. (Reporting by Cyntia Barrera Diaz in Mexico City and Robin Emmott in Monterrey; editing by John Wallace)