Thyssenkrupp labour leaders see progress in Tata Steel JV talks

* Comments come a day after supervisory board meeting

* Unions won't support higher debt level for JV

* Thyssenkrupp (IOB: 0O1C.IL - news) plans signing of JV by end-June (Adds more comments from labour sources, context)

DUESSELDORF/FRANKFURT/LONDON, June 14 (Reuters) - Labour representatives at Thyssenkrupp have moved closer to an agreement with management over a planned European steel joint venture with Tata Steel (BSE: TATASTEEL.BO - news) , a member of the group's supervisory board said on Thursday.

"We have made progress in talks with management over the steel joint venture with Tata," Markus Grolms, Thyssenkrupp's supervisory board vice chairman and trade union secretary at the IG Metall union, told Reuters.

Sources told Reuters a day earlier that both groups were struggling to finalise the joint venture, citing a valuation gap of between 500 million and 3 billion euros ($587 million to $3.5 billion) that needed to be addressed in negotiations.

One of the options to plug the gap could be raising the level of liabilities Thyssenkrupp will transfer to the venture, currently put at 4 billion euros compared with 2.5 billion coming from Tata Steel, which Grolms dismissed.

"We will not support raising the debt level for the joint venture," he said, a day after Thyssenkrupp's supervisory board meeting met to discuss the joint venture.

Talks between Thyssenkrupp and Tata Steel to create Europe's No.2 steelmaker are entering their final stretch after more than two years, with a signing still planned by the end of June.

While not absolutely necessary to get the deal through, Thyssenkrupp Chief Executive Heinrich Hiesinger, under pressure from activist shareholders Elliott and Cevian, needs the support of the labour side to ensure a smooth transaction.

"Management now needs to do its homework by the end of the month and straighten out the open issues," said Detlef Wetzel, member of the works council of Thyssenkrupp Steel Europe, the unit to be merged with Tata Steel Europe.

This, he said, included fixing the valuation gap, which sources said could also be done by Thyssenkrupp taking a bigger equity stake in the joint venture than Tata while keeping voting rights at 50 percent to be able to deconsolidate the asset. ($1 = 0.8521 euros) (Reporting by Tom Kaeckenhoff, Christoph Steitz and Maytaal Angel; editing by David Evans)