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UPDATE 1-VW and Ford close to deal on self-driving cars, VW says

* Talks have been ongoing for months

* VW CEO updates top managers at retreat at headquarters

* VW needs U.S. partnership to balance strength in China

* Ford said talks continue (Updates with comment from Ford, background on Aurora)

HAMBURG, June 13 (Reuters) - Volkswagen and Ford are close to reaching a deal on a partnership for developing self-driving cars, the German carmaker's chief executive said on Thursday.

Volkswagen and the No. 2 U.S. automaker signed a deal in March to develop a pickup truck and have been in talks about extending the alliance to include autonomous driving and mobility services.

The talks are "going well and are nearly complete," VW CEO Herbert Diess told some 500 of the company's top managers from around the world gathered at its headquarters in the German town of Wolfsburg.

Ford said talks are continuing and that it would share updates when details became firm.

"Discussions have been productive across a number of areas," a spokeswoman said in an emailed statement.

Carmakers are increasingly looking to partnerships and alliances to help share the cost of moving to new cleaner technologies, potentially saving billions of dollars in costs.

Volkswagen, navigating global trade conflicts, views its relationship with Ford as strategically important to help balance its regional interests.

"Today we are de facto a very Chinese-oriented company. For this we need a counterweight in the U.S.," Diess said, according to prepared remarks seen by Reuters.

Earlier this week, Volkswagen said it had ended its partnership with self-driving car software firm Aurora.

The dissolution of the partnership came after Aurora said that it would build autonomous platforms for commercial vehicles with Fiat Chrysler Automobiles.

Ford's majority-owned subsidiary Argo AI is building an automated "driver" that could compete with Aurora's technology.

(Reporting by Jan C. Schwartz in Hamburg and Ben Klayman in Detroit Writing by Tom Sims Editing by Michelle Martin)