* CEO says talks with banks "very positive"
* Shares close up 32.6 percent at 15.25 pence
* Says deal on facility renegotiation not imminent
* Talk of firm's demise "destabilising"
(Adds analyst comment, closing share price)
By James Davey
LONDON, March 17 (Reuters) - The head of HMV said he was confident the struggling British retailer would survive even though constant media speculation about the firm's "premature death" was destabilising his business.
"I am of course very confident," Chief Executive Simon Fox told reporters on the sidelines of the Retail Week conference on Thursday, sending the company's battered shares as much as 34 percent higher.
He said talks the music, books and gaming group was having with its consortium of eight banks, including the state-backed Royal Bank of Scotland and Lloyds Banking Group, were "very positive".
But he said the firm's staff were having a tough time.
"Our premature death and our problems are being much written about and that's very, very destabilising," he said.
"We employ 13,000 people and I'm very confident they have a long term future but it's unsettling for all of us to read what we often read."
HMV's shares, which have lost more than half their value so far this year, ended the day up 32.6 percent at 15.25 pence having been flat ahead of Fox's comments. The stock has tumbled from levels around 150 pence set in mid-2009.
Earlier this month, the 90-year-old company, which trades from about 700 stores in seven countries, issued its second profit warning in two months.
The firm also flagged a higher than expected year-end net debt of 130 million pounds and said it did not expect to meet the terms of its bank lending rules when they are tested in April.
HMV, famous for its Nipper the dog trademark, is in talks with its lenders regarding potential changes to its facility agreement. Fox said an announcement on a new deal with its bank was not imminent.
"It's a process that is a complex process, it is a rigorous process but it is a positive process," he said.
"It will take some weeks, possibly months to re-negotiate the terms of our facilities but it's moving in the direction we were hoping to move in."
Fox had previously sought to avoid breaking the lending rules with plans to close 60 UK shops over the next year and make a further 10 million pounds of savings across the group.
He said he did not expect the banks to press for more store closures as a requirement of future funding although analysts warn a lot of questions remain to be answered.
"The banks may yet force them to raise new equity, as well as pass the dividend, so caveat emptor at this level," said Nick Bubb, retail analyst at Arden Partners.
Analysts have said the firm may need to raise emergency funds by selling equity or its Waterstone's book chain or both. Fox declined to comment on either scenario. (Editing by David Cowell and Jon Loades-Carter)