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UPDATE 1-Eyeing Sprint, Softbank in talks with Japan banks for $23 bln loan - sources

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* In talks with Mizuho, SMFG, MUFG for syndicated loan -sources

* Softbank shares down as much as 17 pct in Tokyo * Softbank and Sprint have confirmed in talks By Taro Fuse and Mari Saito

TOKYO, Oct 12 (Reuters) - Japanese wireless service providerSoftbank Corp is in talks with three major Japanesebanks to borrow $23 billion (1.8 trillion yen) to finance a bidfor U.S. operator Sprint Nextel Corp , sources with directknowledge of the matter told Reuters on Friday.

The proposed syndicate includes Mizuho Financial Group Inc, Sumitomo Mitsui Financial Group andMitsubishi UFJ Financial Group , the sources said.

Acquiring Sprint Nextel would make Softbank a major playerin the U.S. mobile market and represent one of the biggestoverseas acquisitions by a Japanese corporation.

But how Softbank would finance a potential deal remains aconcern for investors.

Softbank and Sprint confirmed they are holding talks.

While Sprint shares rose more than 14 percent,investors dumped Softbank shares in Tokyo on Friday, pushing thestock down as much as 17 percent to its lowest in nearly fivemonths.

In addition to Sprint's market value of just over $15billion, the carrier has net debt of another $14.8 billion.

Softbank's ambitions may also not stop with Sprint, whichmight be looking to buy out its partner, wireless serviceprovider Clearwire Corp .

The Japanese company might use Sprint as a vehicle toacquire smaller U.S. mobile provider MetroPCS Communications Inc, a two-step transaction that would potentially cost morethan 2 trillion yen ($25.55 billion), the Nikkei newspaperreported earlier on Friday.

That would make the deal the biggest overseas acquisition bya Japanese firm and vault Softbank into the upper echelons ofwireless carriers worldwide.

($1 = 78.5100 Japanese yen)

(Writing By Kevin Krolicki; Editing by Ian Geoghegan)

((kevin.krolicki@thomsonreuters.com))

Keywords: SPRINT SOFTBANK/