Japanese officials denied on Sunday the government will ask banks to forgive loans to Tokyo Electric Power Co <9501.T> to help it cope with massive compensation claims arising from the crisis at a stricken nuclear power plant.

The denial came two days after the top government spokesman said banks should be asked to cooperate in easing Tokyo Electric's financial burden, sending their shares tumbling as the market took the comments as a sign the banks may be asked to forgive loans or make other concessions.

I feel he (Chief Cabinet Secretary Yukio Edano) said too much, National Strategy Minister Koichiro Gemba said in a television broadcast on Sunday.

I don't think that the chief cabinet secretary was making a direct request to banks, Goshi Hosono, a special adviser to Prime Minister Naoto Kan and a ruling Democratic Party lawmaker, said in another broadcast.

The first thing is for Tokyo Electric and its bankers to sit down for discussions.

The government agreed on Friday to set up a fund using taxpayers' money to help Tokyo Electric compensate victims of the crisis at Fukushima Daiichi, its nuclear plant that leaked radiation following the March 11 earthquake and tsunami.

The government was not working on the assumption Tokyo Electric, also known as Tepco, would continue to exist in its current form when it devised the scheme, Gemba said.

We have to make sure that this (scheme) would not obstruct free discussions on how power companies should operate, such as those on separating power generation and supply, he said.

Tepco's main creditor bank, Sumitomo Mitsui Banking Corp, and other lenders provided Tokyo Electric with 1.9 trillion yen ($23 billion) in emergency loans in the immediate aftermath of the disasters.

(Reporting by Rie Ishiguro; Editing by Daniel Magnowski)