UPDATE 1-Brazil's Braskem reaches reparations deal with city of Maceio

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SAO PAULO, July 21 (Reuters) - Brazilian petrochemical company Braskem said on Friday it has reached a deal to pay reparations to the northeastern city of Maceio, where cracks and sinking ground near its salt mines required thousands of residents to be relocated.

Braskem, which has oil giant Petrobras and conglomerate Novonor as major shareholders, said in a securities filing it will pay Maceio 1.7 billion reais ($354.31 million), of which some 700 million had been previously set aside.

The petrochemical producer has been long grappling with lawsuits related to damages caused by the salt project, having previously reached other deals with federal and state authorities to pay billionaire compensations.

The announcement comes a day after Bloomberg News reported that Brazil's federal audit court was likely to put Braskem's sale process on hold because of the case.

Novonor has been looking to sell its stake in Braskem to repay creditors, and three offers have been presented so far: a joint bid from Abu Dhabi's ADNOC and U.S. asset manager Apollo and separate proposals from Brazilian firms Unipar Carbocloro and J&F.

"It is important to note that the agreement does not invalidate lawsuits or negotiations between Braskem and residents of the affected regions," Maceio's city hall said in a separate statement.

Five neighborhoods have been affected by cracks and sinking ground related to Braskem's activities in the area, it added.

Even so, analysts at Citi said that in their view, the execution of the fresh agreement is "one more relevant step towards the resolution of the incident".

Shares in Braskem were down about 1% on Friday, underperforming Brazil's benchmark stock index Bovespa, which rose 1.2%.

($1 = 4.7980 reais) (Reporting by Gabriel Araujo and Alberto Alerigi Jr.; editing by Jason Neely and Steven Grattan)