UPDATE 1-Russia Norilsk says Glencore asked to sell all nickel

* Glencore declines comment

(Adds background details)

MOSCOW, Aug 12 (Reuters) - Russia's Norilsk Nickel (GMKN.MM: Quote) said on Thursday that Glencore [GLEN.UL], the world's biggest commodities trader, had sought to buy all of its nickel output.

A spokesman for the world's largest nickel and palladium producer said it declined the offer and that talks broke down a few months ago.

"Yes, we received an offer from Glencore," the Norilsk spokesman told Reuters, while declining to disclose the details.

"We analysed the offer and then decided that accepting it would have created negative economic and non-economic effects on Norilsk Nickel," he added.

A source familiar with the offer said it would have given the company control of about 60 percent of nickel traded on the LME.

Glencore declined to comment.

The Swiss-based trader already sells sizeable amounts of nickel and holds minority stakes in Xstrata (XTA.L: Quote) and Australia's Mirrun Murrin and other assets.

(Reporting by Polina Devitt, writing by Alfred Kueppers)