March 17, 2014 / 11:01 AM / 4 years ago

UPDATE 1-Russian official favours state aid to Mechel, shares up

* Industry Minister says help could be in state guarantees

* Shares up 5.7 percent, outperforming the broader index (Adds details, context, share reaction)

MOSCOW, March 17 (Reuters) - Russian Industry Minister Denis Manturov said on Monday he supported the idea of providing state support to indebted coal and steel group Mechel , sending the company’s shares higher.

Businessman Igor Zyuzin’s Mechel is in talks over its debt after Russia’s largest private bank asked for the early repayment of a $150 million loan last week, forcing the Finance Ministry to hold a meeting to discuss the situation.

“It makes no sense in bankrupting Mechel today,” Manturov told reporters in Moscow. “It will be far more effective to provide state support.”

Asked about what support the government could provide, he said it could be in the form of state guarantees.

The company had agreed less than three months ago easier debt terms to give it breathing space to turn itself round. But the demand by Alfa Bank to repay the debt has sent the employer of more than 80,000 people back to drawing board.

It had net debt of $9.4 billion as of late 2013 and needs to repay $1 billion this year.

Mechel shares were up 5.7 percent in Moscow by 1023 GMT after rising 6.2 percent and outperforming the broader index , which added 2.5 percent.

Its market value has lost about 40 percent in Moscow since the start of 2014. The company has previously blamed a part of the slump on speculation. (Reporting by Svetlana Burmistrova; Writing by Polina Devitt; Editing by Elizabeth Piper)

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