A Japanese state-backed fund is offering to aid Sharp Corp in a $3 billion restructuring that would also see fresh aid from the ailing electronics giant's banks and would split off its display business, a person familiar with the talks said on Tuesday.

Sharp's stock jumped nearly 8 percent in early trade on reports of a bailout but the gains faded and the share was up 0.9 percent in late morning trade.

Sharp said in a statement it is in talks with various companies about LCD business but no decisions have been reached.

Spokesmen for the banks and Japan Display declined to comment. An INCJ representative could not immediately be reached.

(Reporting by Taro Fuse; Additional reporting by Makiko Yamazaki and Taiga Uranaka; Writing by William Mallard; Editing by Michael Perry)