* Shares rise, among top performers on Paris market
* But Casino shares still down nearly 40 pct in 2018
* Traders see some reassuring signs in Kepler note
PARIS, Sept 14 (Reuters) - Shares in French supermarket retailer Casino, whose stock price has been hit by concerns over its debts and that of parent Rallye, rose sharply on Friday after a reassuring note from brokerage firm Kepler-Cheuvreux.
Casino shares were up by 4.4 percent in mid-session trading, among the best performers on Paris' SBF-120 index, although the stock remains down by some 36 percent so far in 2018.
Kepler Cheuvreux's note cited feedback during a meeting with Casino CEO Jean-Charles Naouri.
It said Naouri was focusing on Rallye's high levels of debt, and that Naouri confirmed that Rallye and Casino would not merge and executives were "working on the Rallye issue but it was too early to talk about it."
Casino was also looking closely at its 20 underperforming hyper markets and was now ready to take more drastic steps by selling or closing them, added Kepler Cheuvreux's note.
Rallye, through which Naouri controls the Casino retailer company, needs to repay over 600 million euros ($702 million) worth of bonds in October and 300 million in March.
The more Casino's shares fall, the less room Rallye has to manoeuvre since its credit lines require it to pledge Casino shares as collateral for its debts.
Ion-Marc Valahu, a fund manager at Geneva-based investment firm Clairinvest, said the Kepler note was helping to lift Casinos shares on Friday.
"The comments made by Naouri in the Kepler note are reasonably reassuring, and the fact that Naouri has communicated is good as there is nothing worse than staying silent during a period of turbulence," said Valahu, whose firm owns some Casino shares.
"Rallye has some bonds maturing in the next couple of months, and that will determine the future of the company," he added.
Earlier this month, credit rating agency Standard & Poor's pushed Casino's debt deeper into junk territory, derailing the retailer's efforts to reassure investors over the sustainability of its finances ahead of a repayment deadline.
($1 = 0.8545 euros) (Reporting by Sudip Kar-Gupta, Dominique Vidalon, Helen Reid; Editing by Leigh Thomas)