UPDATE 1-Vivendi denies $4.2 bln Brazil debt sale plans

* Newspaper had reported 7.2 bln reais Vivendi bond plan

* Vivendi last week bought control of Brazil's GVT

* Vivendi shares down 0.4 percent (Recasts to add double dateline, Valor report, shares)

By Dominique Vidalon and Guillermo Parra-Bernal

PARIS/SAO PAULO, Nov 19 (Reuters) - Vivendi , Europe's largest diversified media and telecommunications group, denied plans to sell 7.2 billion reais ($4.2 billion) of notes in Brazil's debt markets to fund the takeover of local telecom company GVT.

The French company, which last week said it had gained control of about 54 percent of GVT's capital, will fund the buyout with existing credit lines, a Paris-based spokesman told Reuters on Thursday. Those lines total about 6 billion euros ($8.9 billion), according to the estimates of several analysts.

"We are denying the rumor of a $4 billion bond aimed to fund the acquisition of GVT," the Vivendi spokesman said.

The Vivendi plan for a local debt sale in Brazil was reported earlier by Valor Economico newspaper. The company's bid, disclosed on Friday, values GVT at $4.2 billion.

According to Sao Paulo-based Valor, which did not say how it obtained the information, Vivendi was considering the bond sale to close the apparent mismatch in GVT's cash flow while fending off foreign exchange risk.

Using the credit lines in euros in Brazil would be too expensive, Valor said. Brazil's corporate debt market, where bond maturities are stretching out between seven and 10 years, would allow Vivendi to trim borrowing costs, Valor added.

GVT's debt is mostly denominated in Brazil's currency, the real , which has gained more than a third against the U.S. dollar this year.

In a surprise move, Vivendi said on Friday that it had acquired 37.9 percent of GVT's voting stock for 56 reais each and disclosed that it had the right to exercise irrevocable options for an additional stake of 19.6 percent.

The company also said it would file a mandatory tender offer of 56 reais a share for all of GVT's outstanding shares.

Vivendi's bid trumped Telefonica's $3.9 billion unsolicited offer for GVT. Telefonica will launch an offer for GVT shares in Sao Paulo later on Thursday at a price of 50.5 reais each.

Vivendi fell 0.4 percent to 19.32 euros.

($1=1.731 reais)

($1=0.672 euros) (Editing by Lisa Von Ahn)