Ocado expects to conclude Morrisons deal this year

* Ocado boosted by hopes for renewal of Morrisons deal

* Amazon also targeting UK online food retail (Adds CFO comments, analyst comments, share price)

By Sarah Young

LONDON, March 15 (Reuters) - Ocado said it expected to renew a deal with Morrisons this year even though its key customer has reached a supply agreement which will allow Amazon to expand into online food retail.

Ocado, which as well as providing supermarket group Morrisons with online services also sells products supplied by upmarket chain Waitrose, said last month that it was in talks with Morrisons to renegotiate a deal struck in 2013.

The amendments sought by Morrisons were disclosed on the same day it announced a major tie-up to supply U.S (Other OTC: UBGXF - news) . online giant Amazon with groceries, raising questions about the future of its relationship with Ocado.

Morrisons is using Ocado to distribute its online products. Morrison's separate deal with Amazon is a wholesale agreement where Morrisons will supply Amazon with its products and Amazon will control how much it charges customers for them.

Ocado said on Tuesday that the new Morrisons agreement was on course to be finalised, reassuring investors over a tie-up which Shore Capital analysts have called "critical to Ocado's future".

Ocado's Chief Financial Officer Duncan Tatton-Brown told reporters that the deal would be finalised "relatively soon".

"Don't think it's going to be the end of the year before we announce something," he said. "Lawyers need to put that into contracts and that takes some time but everything's progressing as we would expect."

Morrisons had said in February that there was no certainty an agreement would be concluded.

Founded by three former Goldman Sachs (NYSE: GS-PB - news) bankers in 2000, Ocado has divided opinion like few other stocks. Some view its home deliveries from giant distribution centres as the future of grocery shopping. Critics regard it as a costly and complicated venture that will never make sustained profits.

Shares (Berlin: DI6.BE - news) in Ocado traded 3.3 percent higher at 270.5p at 1025 GMT after the company also posted a 13.8 percent rise in gross retail sales in the 12 weeks to Feb. 21 compared to the same period last year, a performance praised by analysts.

"We believe this implies gradual market share gains at Ocado.com," Jefferies analysts said, who have a "hold" rating on the stock, adding that details of how the deal with Morrisons would change would be material for the group.

Ocado is also looking to sign a deal with an international retailer to provide it with services linked to its core expertise of automated warehouses, but it missed out on its target of securing a first one in 2015.

Tatton-Brown repeated that he remained confident about securing a new partner.

"Our confidence levels have not changed at all. We continue to talk to multiple parties," he said. (Reporting by Sarah Young, additional reporting by James Davey; editing by Keith Weir)