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UPDATE 1-Kone working with Hengeler Mueller in Thyssenkrupp elevator deal-sources

Christoph Steitz

deal-sources@

* Hiring of law firm comes ahead of expected bid

* Kone sees Thyssenkrupp elevator unit as "perfect fit"

* Shares narrow losses (Adds share reaction, context)

FRANKFURT, Sept 9 (Reuters) - Finland's Kone has hired German law firm Hengeler Mueller ahead of a planned takeover bid for Thyssenkrupp's elevator division, two people familiar with the matter said.

The move underscores Kone's strategic interest in the business, which analysts say could be worth as much as 17 billion euros ($19 billion) and which Thyssenkrupp has put up for sale as part of a broader restructuring.

Kone and Hengeler Mueller both declined to comment.

Shares in Thyssenkrupp, which are due to leave Germany's benchmark DAX index later this month, briefly narrowed losses to trade down 0.2% following the news after falling as much as 3.9% earlier.

Thyssenkrupp's supervisory board would be informed about initial expressions of interest for Elevator Technology (ET) during a meeting on Wednesday, people familiar with the matter have said.

Kone is seen as the most likely strategic bidder after its Chief Executive Henrik Ehrnrooth made public his interest in the asset, calling it a "perfect fit" in a newspaper interview.

Raising its target price to 12.60 euros per share from 11.50 euros, Independent Research said strategic bidders, including Kone, were likely to ask for a majority stake in ET, unlike private equity firms who were also in the running. (Editing by Thomas Seythal and Edmund Blair)