UPDATE 1-Venezuela says "problems" in steel takeover talks

(Adds Chavez comment, background)

CARACAS, Aug 27 (Reuters) - Venezuela's President Hugo Chavez said on Wednesday talks with Argentine-controlled steelmaker Ternium (TX.N) over the nationalization of its Sidor plant had run into problems even though the two sides had agreed a price.

Chavez said the government did not accept Ternium demands for immediate payment or a conflict resolution agreement in talks for the takeover of the giant steel site on the banks of the Orinoco river.

"The representatives of Ternium Sidor are asking for something impossible," Chavez said during a televised cabinet meeting. "We will pay them at the rhythm that we can pay them."

The president did not reveal the agreed price, although Argentine media last week reported that Venezuela will pay $1.65 billion for the plant, which was privatized in 1997.

The Argentine newspaper Clarin said Ternium would remain with a 10 percent stake under the deal.

Chavez nationalized Venezuela's largest steelmaker as part of a drive to put the government in control of key industries including oil companies and the telecommunications sector.

Chavez hopes that the steel takeover, along with the expropriation of foreign-owned cement plants will help him meet ambitious home building targets in the OPEC nation. (Reporting by Brian Ellsworth; Editing by Gary Hill)