* Italy, China sign 38 deals worth $2 bln

* Fiat JV to produce cars, engines in China

* Mediobanca, China development bank sign MOU

(Recasts, adds total value, other deals)

Chinese President Hu Jintao's visit to Italy generated over $2 billion worth of deals between the two countries on Monday, including a Fiat SpA (FIA.MI) joint venture to produce cars and engines in China.

Italian Prime Minister Silvio Berlusconi said Italy aimed to become the third-largest foreign investor in China within three years as the two countries signed 38 business agreements.

Among the biggest of those is carmaker Fiat's 50-50 venture with China's Guangzhou Automobile Industry Group to produce cars and engines in China from the second half of 2011, with a total investment of 400 million euros ($560 million). [ID:nMAT009726]

Fiat, which has just taken a 20 percent stake in U.S. auto maker Chrysler, said the plant would produce 140,000 cars a year and around 220,000 motors after a first phase of development.

Other agreements include a Finmeccanica (SIFI.MI) memorandum of understanding (MOU) with Chinese company Chongqing on sales in the Chinese market of electronics and components in a deal worth $42 million and an MOU between Italian bank Mediobanca (MDBI.MI) and the China development bank to support cross-border investments.

Fiat also signed an additional seven deals worth $225 million with Chinese companies.

Fiat has long sought a strong partner in China, where car sales are booming in contrast to slack demand in Europe and the United States. China's car sales soared 47 percent year-on-year in May to 829,100 units. [ID:nRON004699]

Fiat and Chrysler combined have production of about 4.2 million cars a year and together rank fifth equal to Korea's Hyundai Motor Co (005380.KS) among world car makers.

Fiat said the new plant would be built in Changsha, capital of Hunan province. The project is eligible for support from the Chinese government.

Fiat shares were down 2.4 percent at 6.90 euros at 1444 GMT, while the DJ Stoxx index of auto shares .SXAP had lost 2.8 percent. (Reporting by Giuseppe Fonte; Writing by Deepa Babington, editing by Will Waterman) ($1=.7154 Euro)