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INTERVIEW-Japan's JFE eyes $6 bln domestic steel upgrade, warns on U.S. trade policy -president

policy -president@

* Parent of Japan's no.2 steelmaker lines up 3-yr capex plan

* Modernizing plant to boost global competitiveness-JFE pres

* Trade clampdown under President Trump is 'biggest fear'

* JFE's Hayashida sees danger of other countries retaliating

TOKYO, Feb 14 (Reuters) - JFE Holdings Inc, parent of Japan's second-biggest steelmaker, plans to spend more than 650 billion yen ($6 billion) over the next three years upgrading domestic production facilities in a bid to raise productivity and competitiveness.

The capital expenditure plans, outlined by JFE Holdings President Eiji Hayashida president in an interview on Wednesday, will be part of a new business strategy for JFE, covering the three years ending March 2021, around April.

"We've spent a bit more than 650 billion yen in the past three years on domestic facilities and we will need to do it again for the next years, which would give us a very competitive foundation," Hayashida told Reuters.

"We may even increase the spending," he said.

Japanese steelmakers, including JFE's bigger rival Nippon Steel & Sumitomo Metal Corp, are making hefty investment in aging domestic plants. Glitches at the plants - some more than 40 years old - have prevented them from producing as much steel as they would have liked amid growing global demand.

Outside Japan, home to 55 percent of the company's steel output, Hayashida said JFE may build new lines at its automotive steelmaking plants in China and Thailand - if demand picks up.

TRUMP CONCERNS

Hayashida provided upbeat outlook for global steel demand for 2018, including the world's biggest buyer China, but he expressed concerns over U.S. President Donald Trump's trade policy.

Trump said on Tuesday he was considering a range of options, including tariffs and quotas, to address steel and aluminum imports into the United States that he said were unfairly hurting U.S. producers.

"I think we don't have to worry about China (economic) risk at least this year," Hayashida said.

"My biggest fear is how far President Trump will close down trade," the executive said. "If the U.S. takes action (to curb imports), it may trigger retaliation by other countries. What is most troublesome is to see the world heading to protectionism."

Elsewhere, Hayashida said there were no plans for JFE to increase its 15 percent stake in Indian partner JSW Steel Ltd to capitalize on potential market growth in India.

"I don't see any benefit from raising our stake from the current 15 percent," he said. "I feel comfortable with the current level."

($1 = 107.5600 yen) (Reporting by Yuka Obayashi and Ritsuko Shimizu; Editing by Kenneth Maxwell)