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Thyssenkrupp works council softens opposition to Tata Steel deal

* Tata Steel (BSE: TATASTEEL.BO - news) tie-up possible if conditions met-works council

* Remarks signal softening stance ahead of board meeting

* MoU does not requite consent of supervisory board -council (Recasts, adds quotes, context)

DUESSELDORF, Sept 19 (Reuters) - Thyssenkrupp (IOB: 0O1C.IL - news) 's works council is prepared to consider a merger of the group's European steel operations with those of Tata Steel, it said on Tuesday, softening its no-go rhetoric over the consolidation plan.

Chief Executive Heinrich Hiesinger says a joint venture is the best way to take overcapacity out of the volatile steel market, and said he has no plan B despite reported calls from various investors, including activist firm Cevian, to consider a break-up instead.

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Hiesinger has faced stiff opposition from labour leaders over the issue, who have campaigned against the move for months on fears of job losses. He would strongly prefer to avoid confrontation with unions.

Holding half of the 20 seats on Thyssenkrupp's supervisory board, any change in tone among labour representatives is closely watched ahead of a Sept. 23 meeting of the committee, where the plans will be discussed.

"We will examine it and if in the end our conditions are fulfilled and the whole unit is debt-free then it's a possibility," Wilhelm Segerath, head of Thyssenkrupp's works council and member of the group's supervisory board, told reporters.

Labour leaders have called for far-reaching job and plant guarantees and investment pledges as a condition to hold in-depth talks with management over a tie-up.

Segerath, however, said that negotiations would be difficult and that the council continued to reject the idea of a merger, which would create Europe's No.2 steel group after ArcelorMittal (LSE: 0NSF.L - news) , demanding that other options will also be discussed.

Potential alternatives range from a carve-out, sale or listing of Thyssenkrupp's elevator unit to a complete break-up of the group. Unions have not said what kind of restructuring they prefer.

Thyssenkrupp, whose fiscal year ends Sept. 30, has said there could still be a memorandum of understanding (MoU) with Tata Steel this month, which would pave the way for due diligence, a detailed look at each other's accounts.

Segerath said that while labour representatives would oppose an MoU such an agreement did not require the consent of the supervisory board, adding that due diligence would not be completed this year. (Reporting by Tom Kaeckenhoff; Writing by Christoph Steitz; Editing by Georgina Prodhan)