UPDATE 1-Brazil signs deal with France to build Eurocopters

(Adds Lula and Jobim comments, agreement details, byline)

By Raymond Colitt

BRASILIA, June 30 (Reuters) - Brazil signed an agreement on Monday with France for Eurocopter to build helicopters in the South American country, the government said, as part of a broader strategic defense alliance.

Brazil's military will purchase Super Cougar helicopters to be built by Helibras, Eurocopter's subsidiary in Brazil, President Luiz Inacio Lula da Silva said during a signing ceremony at an existing Helibras plant in the central Minas Gerais state.

"This plant will produce the aircraft that will serve our Armed Forces and strategic sectors of our economy, such as oil exploration on off-shore platforms," Lula said.

Eurocopter will invest $300-400 million to expand the plant, the company said in a statement.

Both sides have yet to negotiate the exact number of helicopters to be purchased by Brazil's military from Eurocopter, the helicopter subsidiary of EADS (EAD.PA).

But Brazil's Defense Minister Nelson Jobim said Brazil intended to buy 50 Super Cougar models, the first of which would be delivered in 2010.

France's Defense Minister Herve Morin canceled his planned visit to Brazil for the signing ceremony, a spokesman for the presidential palace in Brasilia said.

Under the agreement, France would transfer technology and help Brazil expand the export capacity of its aviation industry by aiding the assembly of helicopter components such as engines and electrical systems, the statement said.

"By 2010 we want the domestic content of our defense purchases to rise to 50 percent and by 2020 to 80 percent," said Lula.

Both countries are expected to also sign by December a strategic defense alliance including the construction of a nuclear-powered submarine in Brazil.

Brazil has embarked on a major program to upgrade its armed forces, planning to buy and build equipment to defend offshore oil riches and a porous border in the Amazon jungle.

(Reporting by Raymond Colitt, editing by Phil Berlowitz, Richard Chang)