CORRECTED - UPDATE 1-Mondi suspends machine, 240 jobs at risk

(Corrects headline to show that machine, not plant, will be suspended)

* Says shutdown due to drop in sales margins, prices

* Shares in Johannesburg up 1.77 pct

(Adds details)

JOHANNESBURG, July 8 (Reuters) - Mondi Ltd (MNDJ.J) (MNDI.L), the biggest producer of office paper in Europe, said it would mothball its PM32 paper machine in South Africa, cutting annual production by 120,000 tonnes.

The company said some 240 employees may be affected by the temporary shutdown.

"This is in response to a strong decline in sales margins and low market prices in the fine paper business and a reduction in international selling prices of newsprint," it said in a statement.

Shares in the company were trading 1.77 percent stronger at 33.38 rand by 1316 GMT, compared with a flat All-Share JSE index . (Reporting by Agnieszka Flak)