UPDATE 1-Spain's Canarias joins queue for aid from central govt

(Adds details, background)

MADRID, Oct 5 (Reuters) - Spain's Canarias region will seek757 million euros ($989 million) in aid to repay debt andfinance its deficit, leaving a new central government liquidityfund with little left in its coffers as Madrid weighs whether toseek an international bailout.

The Spanish government set up the 18 billion euro fund tocover the financing needs of the country's autonomouscommunities that are shut out of capital markets.

The indebted regions are at the heart of concerns overSpain's own capacity to manage its finances without seekingforeign aid.

European officials said on Monday that Spain was ready torequest a euro zone bailout for its public finances as early asthis weekend although Germany had signalled that it should holdoff. The prime minister said the next day that there would be noimminent request for aid.

So far the regions of Catalonia, Valencia, Murcia, Andaluciaand Castilla La Mancha have already said they would seek acombined 16 billion euros in aid.

With Canarias nudging that figure up, the fund, to befinanced by Spain's main banks as well as by a 6 billion europayment from the state lottery, will only have about 1.5 billioneuros left in its coffers.

Although several other of Spain's 17 autonomous communities,including Madrid, have said they would not need to tap the fund,various regions are still expected to request aid.

The government's head of regional finances, Javier GonzalezOrtiz, said Canarias would use 327 million euros to repaymaturing debt and 430 million euros to finance the deficit.

He also said the regions tapping the fund would not have tostart repaying the loans before two years and that the loanswould run for a period of 10 years and bear an interest rate of5 to 5.5 percent.

($1 = 0.7657 euros)

(Reporting by Julien Toyer and Rodrigo de Miguel; Editing byTracy Rucinski and Hugh Lawson)

((julien.toyer@thomsonreuters.com)(Tel +34 91 585 2159)(Reuters Messaging:julien.toyer.thomsonreuters.com@reuters.net))