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PARIS, May 23 (Reuters) - Amid mounting calls for his head, Vivendi chief Jean-Marie Messier was reported ready on Thursday to come up with a deal to cut debt and streamline his firm's balance sheet ahead of a do-or-die board meeting.

Le Monde daily reported Messier was once again studying a partial sale of 64-percent-controlled water subsidiary Vivendi Environnement -- the 150-year-old rump of what was a historic French firm before Messier turned it into a global media player.

That would be the second potentially embarrassing U-turn over the fate of Vivendi's water business in as many months, after Messier publicly floated the idea of surrendering majority control only to disown it in front of shareholders in April.

But Messier is seen under pressure to come up with a dramatic solution to a months-long crisis of confidence that has seen debt-laden Vivendi's stock shed 48 percent this year. All eyes are on the board meeting due in New York on May 29.

U.S. board members, less sensitive to French political concerns about ownership of the water supply which have caused problems for Messier, are impatient for Vivendi to complete its transition into a pure "media play" with a stock price to match.

And pressure of a different sort increased on Messier overnight after a senior member of France's corporate establishment made a thinly veiled threat of a management coup.

Claude Bebear, head of insurance giant Axa's supervisory board, said in a radio interview that Vivendi board members needed to define a strategy for the world's second biggest media group, and if necessary, make management changes.

Bebear does not sit on Vivendi's board himself, but he is one of the most influential figures in corporate France and is believed to be close to several Vivendi board members.

Bebear went public with his criticisms after weeks of speculation that he was pulling the strings to limit Messier's powers and prevent the crisis at France's largest private-sector employer eroding the wider status of French capitalism.

Vivendi shares rose over five percent to 33.5 euros as the idea took hold that Messier may be forced to act, dealers said.

WATERING DOWN DEBT

Bebear's agenda remains unclear. But daily Liberation reported on Tuesday that Bebear was behind a scheme to progressively hand back control of Vivendi's media assets, including Universal Studios, to American investors so that it could go back to running the world's largest water business.

Such a move would spell the death of Messier's strategy and possibly the end of his six-year reign at Vivendi. A partial sale of Vivendi Environnement could allow him to cling on.

"This (idea) was in the pipeline. You get the feeling that something has got to happen," Jacques Antoine Bretteil, head of Paris-based fund manager International Capital Gestion, said.

"Either Messier goes or he changes the structure of the company. The market won't accept the status quo," he said.

Taking Vivendi's shareholding in what was historically its main business below 50 percent would strike the water utility's debts off a balance sheet already groaning under 17 billion euros of media debt from two years of astonishing expansion.

But it could raise political hackles after re-elected President Jacques Chirac warned Vivendi Environnement -- and its control of half the French water supply -- must remain French.

That problem is unlikely to go away, with legislative polls due in June. And Chirac owes few favours to Messier, who has been linked with his rivals on both sides of the political divide.

To sidestep political objections, Le Monde reported that Messier had now devised a way to park some of the Vivendi Environnement shares with friendly French institutions.

It said state Caisse des Depots et de Consignations and Societe Generale were interested in joining the deal, which would come alongside a seven-percent capital hike at Environnement. Both banks said they had no immediate comment.

Vivendi had no comment but financial sources confirmed that talks were under way with a number of potential investors, which could be offered juicy terms to take part if a deal went ahead.

Anxious to reduce debt and halt a further drain on Vivendi's cashflow, Messier has already begun to seize control of the situation with the sale of a stake in Rupert Murdoch's BSkyB and by dropping a potentially costly Italian TV deal.

But with Bebear's genteel warnings dripping off the pages of French newspapers, Messier appears under pressure to do more.

"It's unlikely Vivendi will opt for a break-up because that wouldn't solve the debt problem. But after Bebear's remarks, the group can't fail to say something. The shares will be hit if they say nothing after the board meeting," a Paris analyst said.

Vivendi Environnement shares gained 1.4 percent to 35.71 euros, valuing 15 percent of the firm at 1.9 billion euros.

"My impression is that Vivendi will wait until after the elections before selling the stake so that it doesn't become a political football," said David Ferguson, media analyst at Barclays Private Clients in London. "In any case, it's probably a matter of when rather than if."

French media and aerospace group Lagardare meanwhile reaffirmed its longstanding interest in buying Vivendi's French pay-tv channel Canal Plus if it ever went up for sale.