UPDATE 1-Germany's Altmaier defends plan to protect some industries from foreign takeovers

German Economy Minister Peter Altmaier on Tuesday defended government efforts to shield some firms from foreign takeovers, arguing that the state had a responsibility to protect key technology and certain industrial sectors.

The takeover of robotics firm Kuka by China's Midea in 2016 spooked Germany, as did the surprise purchase earlier this year of a 9.7 percent stake in Daimler by Chinese carmaker Geely.

In July, the state-controlled KfW bank bought a stake in high-voltage grid operator 50Hertz to prevent China's State Grid acquiring the shareholding, after Berlin failed to find an alternative private investor in Europe for the firm.

Speaking to business leaders at an industrial conference in Berlin, Altmaier said: "Germany will remain the most open and most liberal country when it comes to mergers", but the government was considering stricter takeover rules.

Berlin must be able to have a closer look at who wanted to buy parts of Germany's critical infrastructure, and senior officials are working on changes to foreign trade regulations to ensure that key technologies remain in German hands, he said.

These would include government reviews of foreign acquisitions of stakes in companies below the current 25-percent threshold and expanding which types of purchases must be examined.

A government source said last month that Berlin wants the power to investigate if an investor outside the European Union buys at least 15 percent of certain German defense-related or security-linked technology firms.

In addition, the government is considering creating a billion-euro fund that could help such firms in financial trouble, another government source told Reuters last week.

"We are currently working on an industrial strategy for the Federal Republic of Germany, where we want to clarify our interests," said Altmaier, a senior figure among Chancellor Angela Merkel's conservative cabinet members.

In this new industrial strategy, the government would define areas from which the state would have to refrain while also identifying industrial sectors where the state could intervene.

Altmaier pointed to efforts to support the European production of battery cells for electric cars, underlining his willingness to subsidize such a venture for a limited period of time until it was profitable on its own.

Battery cells are a key battleground in the automotive industry as it shifts to electric motors. Currently, the industry sources its requirements mainly from Asian manufacturers.