STOCKHOLM (Reuters) - The head of Sweden's Electrolux (>> Electrolux AB) said he believed a $3.3 billion deal to buy the GE Appliances (>> General Electric Company) business could be salvaged after the United States moved to block it.

The U.S. Justice Department filed a lawsuit on Wednesday to stop the purchase, arguing that it would hurt competition in the market for cooking appliances.

The deal would be the biggest in the Swedish company's history and more than double its annual U.S. sales. Electrolux CEO Keith McLoughlin wants to preserve as much of it as he can.

"I don't see a scenario where, for either party, it would make much sense to split the baby," said McLoughlin, who is an American.

He remained confident that the deal could still be completed by the end of the year, even though talks on remedies with the Department of Justice (DOJ) had so far been unsuccessful. Analysts said disposals might help to settle the dispute.

The Justice Department said the deal would be likely to hurt consumers through higher prices on major cooking appliances.

It also said it would create a duopoly in the supply of these products to buyers such as home builders and property managers. Electrolux, GE and rival Whirlpool (>> Whirlpool Corporation) had a combined market share of 90 percent in this segment, it said.

"We don't agree with their numbers and we will show numbers that are different than that," said McLoughlin, whose company makes appliances under brands such as Frigidaire and Zanussi as well as its own.

POSSIBLE DISPOSALS

Electrolux shares fell by 27.50 crowns -- more than 10 percent -- to 235.70 crowns by 1445 GMT (10:45 a.m. EDT) on the news, removing some of the support the stock has enjoyed since the move was announced last September.

Mathias Leijon, head of fundamental equities at Nordea Investment Management which holds Electrolux shares, said he still believed the deal would happen regardless of whose interpretation of market share data prevailed, perhaps aided by concessions by the Swedish firm.

"I believe Electrolux is prepared to go quite far to make this deal go through. It is a fantastic strategic fit, and there are also substantial cost synergies," Leijon said, adding his bank estimated the present value of the deal at around 60 crowns per Electrolux share.

Analysts at JP Morgan Cazenove said disposals might help to save the deal.

"The high market share in cooking was a known concern but our base case view was that this could be addressed by the disposal of the Hotpoint cooking business (part of GE)," they said.

At times sounding exasperated, McLoughlin said the DOJ had failed to grasp how much more competitive his industry had become in recent years with inroads made by Asian rivals.

"I think it was difficult for them to get the nuances of how the business actually works, in general and also of the competitiveness of this industry -- I don't think they got that at all."

(Reporting by Sven Nordenstam and Niklas Pollard; additional reporting by Helena Soderpalm; Editing by Alistair Scrutton and Keith Weir)

By Sven Nordenstam