UPDATE 1-Turkey, Russia 'very close' to second missile defence deal

(Adds quotes, background, details)

By Ece Toksabay and Orhan Coskun

ANKARA, Dec 13 (Reuters) - Turkey could finalise terms for
delivery of a second consignment of S-400 advanced missile
defences from Russia by April when the first batch will be ready
to operate, Ankara's defence industry chief said on Friday.

Turkey has already agreed to buy two consignments of S-400s,
triggering a crisis with the United States and possible U.S.
sanctions, but Ankara is discussing technology transfer and
joint production with Moscow for the second batch, he said.

The United States says the S-400s are incompatible with
Western defences and has suspended NATO ally Turkey from an F35
stealth fighter jet programme because it fears Russia would gain
information about the jets through deployment of the systems.

Ismail Demir, head of the Turkish Defence Industry
Directorate, said Ankara was still interested in buying U.S.
Patriot defences. Turkey had no preconditions, he said, but
Washington has repeatedly asked Turkey to drop the S-400s.

Under the proposed sanctions Ankara could be blocked from
purchasing F-16 spare parts, Demir said, which would relieve
Turkey from its duties on intellectual property rights and allow
it to resort to domestic production.

"If one of the parties change the rules of the game, the
other party would not have to play the game," Demir said.

TURKISH FIGHTER JET

Turkey wants to eventually replace its existing fleet of
F-16 with its first indigenous fighter jet, the TF-X, and was
open to international cooperation on the project, Demir said.

He said the initial plan was to use General Electric's F110
engine as the starting point for planning the new jet, but the
defence directorate was studying alternatives.

Turkey and Britain are close to agreeing on collaboration to
build a new generation of fighter jet engines for the Turkish
air force, he said.

The 100 million pound ($128 million) deal between Kale Group
and Rolls-Royce was initially signed two years ago but in effect
put on hold in March after failure to resolve differences over
intellectual property rights and terms of production.

The main issue for Ankara was that development and
production should be carried out in Turkey. "Rolls-Royce does
not object to producing it in Turkey, and the existing
differences over mass production and intellectual property
rights can be overcome," Demir said.

He said the structure of a joint venture which has been set
up between Rolls-Royce and Kale could also be altered.

($1 = 0.7794 pounds)
(Editing by Dominic Evans)