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UPDATE 1-Brazil's CSN says spillage at Volta Redonda steelworks slows output

(Adds analyst comment and shares)

RIO DE JANEIRO, May 15 (Reuters) - Brazilian steelmaker Cia Siderurgica Nacional (CSN) said a spillage in the steelworks of its Volta Redonda plant affected at least 20 employees on Wednesday and stopped production in the affected area.

Some employees had inhaled dust and were sent to hospital, the company said.

A spokesman for the company said the rest of the plant in the state of Rio de Janeiro was still working and the affected area would resume operations later on Wednesday. Television images showed a light gray cloud rising over the plant and neighbors reported hearing loud noises.

Analysts at Itaú BBA said in a note to clients that the incident was a slightly negative for CSN shares.

“We acknowledge that negative headlines could weigh on the share price during the day, and highlight that any exaggerated reaction could provide an attractive entry point,” they wrote.

Shares in CSN were down 1.7% in mid-morning trading, underperforming the Ibovespa benchmark index which was down 1.3%. (Reporting by Rodrigo Viga Gaier; Additional reporting by Alberto Alerigi Jr. and Paula Laier; Writing by Carolina Mandl; Editing by Bernadette Baum)