By Christiaan Hetzner and Kevin Krolicki

FRANKFURT/DETROIT, Sept 8 (Reuters) - The board of General

Motors Co began meeting in Detroit on Tuesday as the

German government stepped up pressure on the automaker to

clarify its long-term plans for its European Opel operations.

The board meeting coincided with a warning that the cost of

keeping Opel could run $1.45 billion higher than an 'overly

optimistic' projection prepared by GM in June.

GM, which emerged from bankruptcy under U.S. government

ownership in July, has been in intensive negotiations with two

bidders to sell control of Opel and its British affiliate,

Vauxhall, since May.

But last month the newly appointed GM board declined to

endorse a plan to sell the operations to a group led by

Canadian auto-parts group Magna International that has

the backing of Germany's government.

Instead, the 13-member board asked GM management led by

Chief Executive Fritz Henderson to return with more information

on two alternatives to the Magna deal.

Specifically, the board asked for renewed consideration of

a sale to Brussels-listed RHJ International or a

third option that would see GM keep Opel by raising the

billions of dollars needed for its restructuring, sources

familiar with the deliberations have said.

In a report presented to the GM board, adviser KPMG said

that GM would face 'an additional cash need of up to $6.1

billion' to keep Opel.

GM had previously estimated that it would need $4.65

billion in cash to keep Opel and repay a roughly $2 billion

bridge loan from the German government, the report said.

A copy of the report was obtained by Reuters.

KPMG had no comment. A GM spokeswoman could not be reached

for comment.

With some 25,000 German jobs directly at stake and an

election looming at month end, the slow progress toward a

resolution of the Opel situation has been met with mounting

frustration by German government officials.

'We are keeping Opel' is not a strategy yet,' German

Deputy Economy Minister Jochen Homann said on the sidelines of

an energy conference in Munich on Tuesday.

GM's board of directors began a two-day meeting on Tuesday

to discuss Opel, which ranks as the second-largest brand behind

only Chevrolet for the still-struggling automaker.

Berlin wants a decision ahead of the Frankfurt car show

starting next week, where Opel will unveil the latest version

of its most important model, the Astra compact.

MAGNA CONCERNS LOOM

GM consented in May to a Magna deal but gradually retreated

from that position after emerging on July 10 from a fast-track

bankruptcy funded and sponsored by the U.S. Treasury.

Part of the concern over the Magna deal at GM reflects the

risk that the transaction could undermine the automaker's plans

for faster-growing European markets led by Russia and put key

technology at risk of leaking to rivals, people familiar with

the deliberations have said.

The Magna plan involves an equity stake for the Russian

bank Sberbank and an industrial partnership with

Russian automaker GAZ Group.

In addition, GM depends on Opel's engineering for key model

launches such as the upcoming Chevy Cruze small sedan that are

crucial to its effort to meet tough fuel-efficiency standards

and rising U.S. consumer demand for smaller vehicles.

GM's board indicated last month that it was leaning toward

a deal that would allow it to keep Opel as closely integrated

to its operations as possible, sources have said.

Keeping Opel outright would involve raising funds to cover

a roughly $2 billion (1.5 billion euro) bridge loan extended by

the German government and the costs of restructuring the

money-losing operation.

Germany has ruled out aid to help GM keep Opel after

throwing its weight behind Magna.

'The German government has made it clear on repeated

occasions that state aid depends on a solution with an

investor,' a spokesman for the Economy Ministry said.

But some analysts expect GM's board to keep that option

open because of the prospect of deeper savings from sharing

technology and parts with its U.S. and Asian operations.

GM's European unit lost $2.8 billion in 2008 as the global

auto market contracted and its U.S. operations skidded toward

bankruptcy.

GM has said repeatedly the RHJ offer would be easier to

implement than the Magna plan for Opel that Germany backs.

RHJ raised the stakes last week by sweetening its offer.

The Belgian-listed financial group would pay slightly more and

need substantially less state aid, letting it return taxpayer

money a year sooner than initially estimated.

Given the complications, many analysts believe GM will hold

off on a decision until after the German election on Sept. 27,

which is likely to produce a new center-right government.

This would avoid embarrassing conservative Chancellor

Angela Merkel and her left-leaning coalition partners, the

Social Democrats, ahead of the vote.

For a FACTBOX on Opel sites and staff click on

For SCENARIOS on the board decision click on

For stories on Germany's elections click on

($1=.7028 Euro)

(Reporting by Vera Eckert, Christiaan Hetzner, Angelika Gruber

and Kevin Krolicki, editing by Will Waterman and Matthew

Lewis)

Keywords: GM/OPEL

(maria.sheahan@thomsonreuters.com; +49 69 7565 1286; Reuters Messaging: maria.sheahan.thomsonreuters.com@thomsonreuters.net)

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