*

Funds would only last a few weeks, DI reports

*

Talks continue on larger financing package

*

Company hit by production problems, weak demand,

competition

(Adds detail from DI report in paragraph 2, background in 4-7)

STOCKHOLM, Oct 23 (Reuters) - Sweden's Northvolt has

struck a deal that gives the cash-strapped battery maker access

to a small amount of money while talks on a bigger financing

package continue, business daily DI reported on Wednesday,

citing unidentified sources.

The cash was only expected to last for a few weeks at most,

allowing the company to pay wages on Friday, the report said.

Northvolt did not immediately respond to a request for

comment.

The group has in a matter of months gone from being Europe's

best shot at a home-grown electric vehicle battery champion to

racing to stay afloat by slimming down and cutting jobs, hobbled

by production problems, sluggish demand and Chinese competition.

Northvolt could announce a financing package of more than

$300 million before the end of October that would give it enough

funds until next year, a person with direct knowledge of the

company's plans told Reuters on Monday.

The company has said in recent weeks that it was in talks

with investors and lenders to secure funding and making

significant progress towards a deal.

But even $300 million would be far less than the 15 billion

crowns ($1.4 billion) that Swedish media reported Northvolt was

aiming for a few months ago, or even a scaled-back ambition of

7.5 billion crowns reported last month.

($1 = 10.6026 Swedish crowns)