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Honda to sell new compact car in the U.S.-paper

TOKYO, Jan 29 (Reuters) - Honda Motor Co will start selling a new 1,300 cc compact car in the United States to counter the growing popularity of cheap South Korean-made vehicles in its most important market, a newspaper said on Thursday.

The Nihon Keizai business daily said the new model would be based on Honda's strong-selling Fit subcompact, also known as the Jazz.

It will be priced from around $10,000, cheaper than the Civic -- currently the most popular small car in the U.S. for Japan's second-largest auto maker, it said.

Honda is considering exporting the vehicles from Japan but may make them in Brazil if the dollar continues to trade below 110 yen, the paper added.

Japanese auto executives have expressed concern that the popularity of South Korean vehicles among young, first-time buyers could eventually undermine their strong hold on the U.S. small-car segment.

South Korea's Hyundai Motor Co in particular has had a strong five years of growth in the U.S. market.