CORRECTED - Li & Fung may stop financing Arcandor suppliers -paper

(Corrects paragraph 3 to say that Li & Fung pays suppliers, not Arcandor)

FRANKFURT, Nov 21 (Reuters) - Hong-Kong based consumer goods exporter Li & Fung (0494.HK), which manages retailer Arcandor's (AROG.DE) Asian supply chains, does not want to continue issuing interim financing for the Arcandor suppliers, a newspaper said.

German newspaper Lebensmittelzeitung reported the development, without citing sources, on Friday.

Li & Fung acts as middleman between the suppliers and Arcandor, paying suppliers upfront on behalf of Arcandor.

But due to the financial crisis, Li & Fung is reluctant to provide such services and to take on the risk, the paper said.

Suppliers are struggling with weaker demand, particularly from the United States, as the financial crisis spoils consumers' appetite for spending, the paper said.

Some contracts with suppliers may be at risk, the paper said.

Li & Fung was not immediately available for comment.

An Arcandor spokesman said: "We have contracts with Li & Fung as well as with suppliers and we expect that these contracts will be fulfilled."

"This does not in any way affect our Christmas business," he added. Supply was already in stock for the busy season. (Reporting by Eva Kuehnen and Nikola Rotscheroth in Duesseldorf; Editing by David Holmes and Sharon Lindores)