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UPDATE 1-Japanese PM Abe asks UK PM May for 'smooth Brexit' for business

* Abe asks May to ensure Brexit stability for businesses

* Abe says flag of free trade must be hoisted high

* Abe says remains confident in UK economy after Brexit vote

* May says UK will remain the best place for business in Europe (Adds May quotes, context)

By Guy Faulconbridge and Kate Holton

LONDON, April 28 Japanese leader Shinzo Abe asked Prime Minister Theresa May on Friday to ensure a smooth Brexit to allow Japanese companies to continue to operate as the United Kingdom exits the European Union.

The leader of the world's third largest economy praised PM May for what he said were attempts to secure Brexit transparency and a transitional period to ease the United Kingdom's exit from the EU that is scheduled for March 2019.

Since the shock June 23 Brexit vote, Japan has expressed unusually strong public concerns about the impact of Brexit on the United Kingdom, the second most important destination for Japanese investment after the United States.

"The United Kingdom finds itself in the midst of major changes as it moves towards exiting the EU," Abe said through a translator after lunch with May at Chequers, the country house of the British prime minister.

"I requested the prime minister for her continued consideration to ensure the smooth operations of businesses including Japanese companies," Abe said.

May, an initial opponent of Brexit who won the top job in the political turmoil that followed the referendum vote and now has promised to make a success of the EU divorce, said she updated Abe on the preparations for Brexit.

The outcome of the Brexit negotiations will shape the future of Britain's $2.6 trillion economy, the world's fifth biggest, and determine whether London can keep its place as one of the top two global financial centers.

"I continue to have confidence in the economy of the UK after Brexit," Abe said, adding that Japan and the United Kingdom were the closest of allies on security matters in Asia.

BREXIT?

May said she wanted to ensure "the UK remains the best place in Europe to run and grow a business, whether it's one operating at home or abroad."

Japanese companies including carmaker Nissan and conglomerate Hitachi have invested more than 40 billion pounds ($52 billion) in the United Kingdom. They employ a total of 140,000 people in the country.

"It is important for the global economy that Brexit takes place smoothly and successfully," Abe said. "I evaluate highly the fact that the UK is focusing on securing transparency, predictability and introducing a transitional period."

May mentioned SoftBank's purchase of Britain's most valuable technology company ARM, Nissan's commitment to build the new Qashqai model at their plant in Sunderland and Toyota's 240 million pound investment in Derby as evidence that Japanese business was confident about Brexit.

May has said she wants a Brexit deal which will enable Nissan and other automakers to flourish in Britain, and last year the Japanese company said it had received assurances allowing it to increase production at its plant in Sunderland, northeast England.

In October, Nissan said it would go ahead with plans to build the next X-Trail and Qashqai SUVs at its Sunderland plant, but gave no details on the type of assurances it had received that the site's export competitiveness would not be harmed.

"In a situation where protectionist trends are becoming pronounced in the world, Japan and Europe and the United States must keep the flag of free trade hoisted high," Abe said. "Japan and the UK see themselves as the standard bearers of free trade." ($1 = 0.7730 pounds) (Reporting by Guy Faulconbridge; editing by Michael Holden and Ralph Boulton)

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