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UPDATE 1-Kyrgyzstan says to settle environment lawsuits with Centerra

(Adds details on agreement, background on conflict)

BISHKEK/TORONTO, Sept 6 (Reuters) - Centerra Gold Inc and the government of Kyrgyzstan have agreed to settle mutual lawsuits over environmental matters related to the Canadian company's Kumtor gold mine, the Central Asian state said in a statement on Tuesday.

Under the agreement, Toronto-based Centerra will contribute $50 million to an environmental fund and increase a so-called environmental payout to $3 million annually, from $310,000, said the statement published on the government's website.

Centerra, which has a trading halt on its stock pending news, did not immediately respond to requests for comment.

The company has long been locked in a bitter dispute with Kyrgyzstan over Kumtor profit sharing, which this agreement does not appear to address, and took it to international arbitration last May.

Centerra is the biggest foreign investor and tax payer in Kyrgyzstan, contributing up to 10 percent of the impoverished nation's gross domestic product. The state also owns a 32.7 percent stake in Centerra.

Centerra, whose main asset is the Kumtor gold mine, also will contribute $10 million to a cancer clinic and follow recommendations of an environmental consultant hired by the government under the agreement, the statement said.

A special fund, which will finance work at Kumtor after its eventual closure, will be moved to a Kyrgyz financial institution from Britain and Centerra will contribute $6 million annually to it, the statement added.

Last year, Centerra was fined around $100 million for environmental damage by a court in Kyrgyzstan, while another regulator filed a $230 million lawsuit against the company.

Last July, Centerra acquired U.S.based Thompson Creek Metals, for approximately $1.1 billion, to reduce its exposure to Kyrgyzstan. (Reporting by Olga Dzyubenko in Bishek and Susan Taylor in Toronto; Writing by Olzhas Auyezov; Editing by Andrey Ostroukh and Bill Trott)