* Elliott agrees to halt lawsuits, back Akzo's board nominations
* Elliott criticized Akzo's rejection of PPG takeover proposal
* Akzo shares rise 0.85 percent (Adds Breakingviews link)
AMSTERDAM, Aug 16 (Reuters) - Akzo Nobel and its biggest shareholder Elliott Advisors ended a long-running dispute on Wednesday as the U.S. activist investor agreed to halt legal action against the Dutch paint company and to support its board nominations.
The move marks a major shift in Akzo Nobel's relations with the hedge fund, which last week lost its second legal attempt to convene a shareholders' meeting to vote on the removal of Chairman Antony Burgmans.
Elliott and other large investors had been highly critical of Akzo's decision, on Burgmans' watch, to reject a 26 billion euro ($30.44 billion) takeover proposal from U.S. rival PPG Industries.
For months, Elliott, which owns 9.5 percent of Akzo, waged a public campaign urging Akzo, the maker of Dulux paints, to enter talks with PPG and criticizing Akzo's plans to go it alone.
Akzo shares rose 0.85 percent to 77.22 euros on Thursday, well below PPG's proposed 95 euro per share offer.
Under a "standstill agreement" announced on Wednesday, AkzoNobel and Elliott agreed to suspend all ongoing litigation for at least three months.
Elliott agreed to support the nomination of new CEO Thierry Vanlancker and two supervisory board members, Akzo said in a statement.
Akzo promised to give Elliott and other major shareholders a say in naming a third supervisory board member.
Under the agreement, the hedge fund will also support Akzo's decision to sell its Speciality Chemicals division, which represents about a third of sales and profits. Elliott had always said it supported such a sale.
Gordon Singer, CEO of Elliott Advisors (UK) Ltd, welcomed the agreement, saying it marked "an important next step in ... enabling the company to deliver compelling value to all its stakeholders."
PPG made three takeover proposals for Akzo in March and April, the last worth 95 euros per share, nearly a 50 percent premium to Akzo's share price in February.
But the U.S. firm chose to walk away in June for a six-month cooling-off period, rather than launch a formal bid which would have been seen as hostile, given staunch opposition from Akzo's boards and Dutch politicians.
Akzo instead set new, more ambitious financial targets in April and said it would sell or float the chemicals division.
Former CEO Ton Buechner resigned in July for health reasons and Vanlancker's approval as his replacement is scheduled for a shareholders' meeting on Sept. 8.
The new supervisory board members nominated on Wednesday are Sue Clark and Patrick Thomas. Shareholders will vote on their appointment at next year's general meeting, when Burgmans is set to retire.
Akzo has not yet indicated a replacement for Burgmans. ($1 = 0.8518 euros)
(Reporting by Toby Sterling; Editing by Adrian Croft)