UPDATE 1-Japan to propose new framework to discuss trade with U.S. - Nikkei

* Japan hopes to persuade U.S. to rejoin TPP

* Economy Min Motegi, USTR Lighthizer to lead talks - Nikkei

* Japan braces for tough trade talks at summit with Trump (Adds detail of plans, background)

TOKYO, April 14 (Reuters) - Japan will propose setting up a new framework to discuss trade issues with the United States in a summit next week, in hopes of persuading it to rejoin the Trans Pacific Partnership (TPP), the Nikkei newspaper said on Saturday.

But the move could backfire, as U.S. President Donald Trump could demand renegotiating terms for the pact or talks for a bilateral free trade agreement (FTA) - both outcomes Japan wants to avoid.

Trump unexpectedly indicated on Thursday the United States might rejoin the landmark TPP, but only if it offered "substantially better" terms than those provided after previous negotiations.

Prime Minister Shinzo Abe will make the proposal when he meets Trump at Mar-a-Lago, the president's Florida resort, on Tuesday and Wednesday, the paper said.

Economy Minister Toshimitsu Motegi is likely to lead the Japanese delegation, with his counterpart likely to be U.S. Trade Representative Robert Lighthizer, the paper said, without citing sources.

The framework will be separate from a bilateral economic dialogue, set up by Abe and Trump in 2017 and led by their deputies, that discusses issues including trade, infrastructure and technical aid.

The dialogue had so far yielded little, with some analysts saying Japan has used it to broaden the agenda and diffuse direct U.S. pressure for a two-way FTA.

Japanese officials are bracing for Trump to get tough in trade talks at the summit, and are particularly anxious that he could target Abe's weak-yen policies.

In his post on Twitter late on Thursday, Trump said the United States was working to make a deal with Japan, "who has hit us hard on trade for years!"

The Trump administration again refrained from naming any major trading partners as currency manipulators but kept Japan on its monitoring list in a currency report.

During the summit, Abe is likely to explain to Trump Japan's plans to boost direct investment to the United States, the Asahi newspaper said on Saturday.

Japan has long upheld a multilateral framework, as its export-reliant economy has benefited greatly from global free trade, and has called on Trump to rejoin TPP.

But it is wary of renegotiating terms, as that would mean upending a pact forged by 11 nations that went ahead without the United States after Trump withdrew from the TPP, in one of his first acts as president.

Tokyo is also cautious of opening up a bilateral FTA with Washington for fear of receiving pressure to open up politically sensitive markets, such as farming and automobiles. (Reporting by Leika Kihara; Editing by Sandra Maler and Clarence Fernandez)