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UPDATE 1-INTERVIEW-Metro will keep investing in Russia so long as trade flows safe

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* Russia, Ukraine remain promising markets for Metro

* So long as sanctions don't hit trade, demand is there

* Russia unit IPO delayed during political turmoil

* Next four to six weeks "decisive" for IPO plan

* Metro needs proceeds to expand in emerging markets

* Capital hike not an alternative to IPO

(Adds link to CEO profile)

FRANKFURT, March 25 (Reuters) - German retailer Metro plans to keep investing in its fast-growing Russian business despite the crisis in Ukraine, so long as threatened G7 sanctions do not influence trade flows, its chief executive told Reuters.

German Chancellor Angela Merkel has warned economic sanctions could follow Russia's annexation of Ukraine's Crimea region, prompting her country's main trade body to warn of "catastrophic losses" for more than 6,000 German companies which do business with Russia.

The United States and European Union have so far imposed asset freezes and travel bans on senior Russian and Crimean officials.

But Metro Chief Executive Olaf Koch said Russia - and Ukraine - were still promising markets for Metro.

"As long as the sanctions against Russia do not influence trade flows, they should have no impact on our business," Koch said in an interview. "Purchasing power in Russia is there, the demand for supplies is there."

Metro is Russia's fourth-biggest retailer behind X5 , Magnit and French chain Auchan. Its Russian unit made a quarter of Metro's group operating profit in 2013 with sales of about $5 billion, some 9 percent of Metro's total.

However the company recently had to delay the stock market listing of a quarter of its Russian cash-and-carry wholesale operation - which had been expected to fetch at least 1 billion euros ($1.38 billion) - owing to market turmoil.

Without money from the delayed IPO, Koch said Metro had enough funds to speed up expansion in Russia in 2014 and 2015, but would have to consider how to pay for further investment after that.

"We want to do more in Russia, that's for sure," he said.

COMING WEEKS DECISIVE FOR IPO

Koch said the planned initial public offering had been well received by investors and should still proceed if the turmoil in Russian markets abated.

"The upcoming weeks will be important for the question of when there will be an IPO," he said, suggesting this time frame would show whether the situation could stabilise.

"The strategic significance and the economic attractiveness of the transaction are still given in our view. But without a stable environment a transaction is not reasonable," he added.

Shares in Metro have fallen sharply since the Ukraine crisis, losing 19 percent so far this year compared to a 2.3 percent decline for the German mid-cap index.

Metro is a sprawling empire of 2,200 outlets in 32 countries including cash-and-carry stores and Europe's largest consumer electronics chain Media-Saturn which it sees as its most promising businesses for the future. It also runs Real hypermarkets and Kaufhof department stores in Germany.

CAPITAL PLANS

After years of cutting investment to see to mounting debts from rapid international expansion, Metro wants to increase capital spending to some 1.6 billion euros this financial year from 1.2 billion the previous year.

Faced with weak consumer confidence and growing online competition in the developed markets that make up two-thirds of group sales, Europe's fourth-biggest retailer had hoped to use the Russian IPO proceeds to cut debt and invest more in emerging markets.

"We could open more stores not only in Russia but also in China and Turkey, and perhaps soon in India. And we want to invest in more established markets such as in Germany," Koch said.

If the flotation does not go ahead, Metro will have to reassess its options, Koch said, but he added a capital increase was not the company's preferred option. If the flotation does go ahead, Metro might also follow the same formula in other emerging markets, although it has no current plans. ($1 = 36.0913 Russian Roubles) ($1 = 0.6065 British Pounds) ($1 = 0.7255 Euros)

(Editing by Sophie Walker)