UPDATE 1-Infineon denies report it has suspended Huawei shipments

(Updates with context, European chip stocks)

FRANKFURT, May 20 (Reuters) - German chipmaker Infineon is continuing most shipments to Huawei, it said on Monday, denying a report in Japan's Nikkei daily that it had suspended deliveries to the Chinese telecoms firm.

Infineon, which makes power-management chips used in cars, smartphones and wind turbines, said most of its products were not covered by the U.S. export control restrictions announced by the Trump administration last Thursday.

"As of today, the great majority of products Infineon delivers to Huawei is not subject to U.S. export control law restrictions, therefore those shipments will continue," Infineon said in a statement.

Nikkei, citing two people familiar with the matter, reported that Infineon had halted deliveries after Washington added Huawei to a trade blacklist, immediately enacting restrictions that will make it difficult for the telecom firm to do business with U.S. companies.

The report hit European chip stocks, with Infineon falling 4% in Frankfurt trading.

STMicroelectronics, which competes with Infineon on the Chinese market, fell 8%. STM declined to comment after Nikkei reported that it would hold meetings this week to discuss whether to continue shipping to Huawei.

Infineon, in a statement to Reuters, said only goods originating in the United States were affected by the export controls. It added it had flexibility to reconfigure supply chains to address changes in applicable laws.

"This enables us to make efficient and proactive adjustments supporting our ability to deliver wherever possible," the company said.

Infineon declined to go into further detail, but its annual report lists Huawei as a leading customer of its Power Management and Multimarket (PMM) division, which it says is the global leader with a 26.3 percent market share.

It acquired its main U.S. production facilities through the $3 billion takeover of International Rectifier in 2015. International Rectifier specializes in the use of gallium nitride in power-management products.

The PMM division accounted for 31 percent of Infineon's annual revenues of 7.6 billion euros ($8.5 billion) last year.

($1 = 0.8961 euros) (Reporting by Douglas Busvine; Editing by Thomas Escritt and Mark Potter)