* CEO says examining all options for the mills
* Says will offer Brazil plant to Vale, Asian buyers
* Invested 12 bln eur as budget plagued by overruns
* Says has no plans to sell European steel business
* Shares gain 1.6 percent as sector declines
By Tom Käckenhoff and Maria Sheahan
FRANKFURT, May 15 (Reuters) - ThyssenKrupp could sell Brazilian and U.S. mills that have saddled Germany's biggest steelmaker with heavy losses, refocusing the group on its core European business after several years of delays and damaging cost overruns.
Chief Executive Heinrich Hiesinger, who took the reins of the conglomerate last year, said the company was considering all strategic options for the two steel mills, including a partnership or a sale.
He put the book value of the two mills at 7 billion euros ($9 billion) - well below the company's investment in the growth projects of closer to 12 billion euros.
ThyssenKrupp will offer its Brazilian plant to its partner Vale, which owns about a quarter of the slab-producing CSA plant venture, but will also talk to possible buyers in Asia, Hiesinger said.
ThyssenKrupp shares, battered earlier in the day by a weaker-than-expected outlook provided alongside first-half results, reversed losses on news of the potential mill sale, trading up 1.6 percent to close at 16.01 euros.
"This will make ThyssenKrupp more attractive from a shareholders' perspective, but whether it actually creates value for the company depends on the price," Commerzbank analyst Ingo Schachel said.
"I don't think it will be easy to find buyers. For the Brazilian plant the natural solution that people expect would be for Vale to increase its stake while an Asian consortium takes the rest," Colin Hamilton, steel and iron ore analyst at Macquarie, said.
A spokesperson for Vale, which has said in the past it had no plans to increase its stake in CSA, said on Tuesday it had not yet been informed by ThyssenKrupp of its intentions.
Analysts have also said steel mills such as Luxembourg-based Ternium or Brazil's CSN were more likely buyers than a miner like Vale. One source familiar with the situation said one of the potential Asian suitors mentioned by ThyssenKrupp could be Korea's Posco.
"We have already seen Asian steelmakers interested in investing in Brazil, including Posco, Baosteel, Dongkuk," he said, adding private equity firms could be potential buyers for the U.S. plant.
Hiesinger said any deal would likely see ThyssenKrupp sell the plants in Brazil and Alabama separately as no buyer will want to have both.
Earlier on Tuesday ThyssenKrupp said operating losses at Steel Americas narrowed to 228 million euros in its fiscal second quarter through the end of March, from 319 million a year earlier.
The plants in Brazil and Alabama were meant to give ThyssenKrupp a strategic foothold in North America just as the automotive and non-residential construction sectors were picking up in the Unites States.
But the steelmaker said soaring costs in Brazil, in particular the strong currency, and rising input prices - combined with lacklustre demand - had eroded the logic of a strategy that should have seen slabs produced cheaply in Brazil and sold at advantageous cost to the United States.
A possible sale of the mills, first rumoured earlier this year after the division pushed the group into the red, marks the latest step in ThyssenKrupp's efforts to slash debt and trim down a business that once stretched from mega-yachts and submarines to elevators.
Among other divestments, it is selling its stainless steel unit to Finland's Outokumpu for 2.7 billion euros.
All options are still open though, Hiesinger said, adding ThyssenKrupp will continue the ramp-up of the mills in Brazil and Alabama until a decision is made. ThyssenKrupp has no plans to sell its European steel business.