Chavez says to lunch with Castro

MONTEVIDEO (Reuters) - Venezuelan President Hugo Chavez said he planned to lunch on Wednesday with ailing Cuban leader Fidel Castro, who has not been seen in public for 16 months.

Chavez said in a speech on Tuesday that he would meet with Castro in Cuba ahead of a Petrocaribe summit.

"Fidel's waiting for me," Chavez told Uruguayan union members after participating in a Mercosur trade bloc meeting in Montevideo, Uruguay's capital.

Castro, 81, suggested he might give up his formal leadership posts in a letter read on Cuban state television on Monday, in his first remarks alluding to his possible retirement.

Castro handed power over temporarily to his brother, Raul, in July 2006 after undergoing stomach surgery for an undisclosed illness. He is the last of the major Cold War players still alive.

Venezuela's firebrand socialist Chavez is a close Castro ally, and the two men have met several times in recent months.

Petrocaribe is a Venezuelan project aimed at supplying oil and fuel to 14 countries on favorable terms.

(Reporting by Daniela Desantis; Writing by Hilary Burke; Editing by Eric Beech)