UPDATE 4-DSK team, prosecutors hold "constructive" meeting

Lagarde says she spoke to DSK about IMF transition (Adds statement from prosecutors)

By Joseph Ax and Basil Katz

NEW YORK, July 6 (Reuters) - New York prosecutors anddefense lawyers for former IMF chief Dominique Strauss-Kahn metfor nearly two hours without any apparent resolution onWednesday as the sexual assault case against him appeared to befalling apart.

Both sides declined to give any details of the meeting.The New York Times had reported they would discuss whether thecharges could be resolved by a dismissal or plea agreement.

"The investigative process is continuing, and no decisionshave been made," a spokeswoman for the district attorney said,an indication prosecutors believe physical evidence suggests anassault took place regardless of any lies the accuser may havetold in the past.

The case was thrown into jeopardy last week whenprosecutors discovered the accuser, a 32-year-old hotel maidfrom Guinea, lied about being gang-raped in her home country inher application for U.S. asylum and changed details of herstory about what she did after her encounter with Strauss-Kahnin a luxury suite.

"We had a constructive meeting. That's all we're going tosay," defense lawyer Benjamin Brafman told a battery ofreporters after emerging from the office of District AttorneyCyrus Vance.

It was uncertain whether Vance, the chief prosecutor forManhattan, attended. An elected official whose reputation couldbe on the line with the high-profile case, Vance has insistedhis team acted properly in the face of criticism that he rushedthe case.

Strauss-Kahn left the Manhattan townhouse where he has beenstaying in a black sedan shortly before the meeting broke up.His destination was unclear.

A New York judge released Strauss-Kahn from house arrestand lifted strict bail conditions on Friday, although seriouscharges including sexual assault and attempted rape remain inplace against the man once seen as a top French presidentialcontender.

Strauss-Kahn, 62, was next scheduled for a court appearanceon July 18, and speculation was building that prosecutors mayhave to drop the charges, which Strauss-Kahn has vigorouslydenied.

The woman who replaced Strauss-Kahn as managing director ofthe International Monetary Fund, former French Finance MinisterChristine Lagarde, called on the media to respect thepresumption of innocence for Strauss-Kahn, adding that she hadspoken with him over the phone in a professional capacity.

"Justice is taking its course," Lagarde told France 24television. "The most important thing is to respect thepresumption of innocence, and I think it would be great if themedia did too."

Her conversations with Strauss-Kahn related to thetransition of leadership and projects that Strauss-Kahn hadinstigated, she said.

"It was strictly professional and related exclusively to myrole as his successor," Lagarde said.

Lagarde clinched the top job on June 28 and took over onTuesday, immediately having to focus on the Greek debt crisis.

Women's rights advocates in turn have shown their supportfor the Guinean accuser, condemning the media and prosecutorsfor "character assassination" while also showing support forStrauss-Kahn's French accuser, Tristane Banon.

"We call on the Manhattan District Attorney, as well asprosecutors and courts around the world, to ensure that Hawa,Tristane Banon and all other women and girls with the courageto come forward and press charges are treated with sensitivityand respect," Equality One, a women's rights advocate groupsaid in a statement, using a pseudonym for the accuser.

Banon, a French writer, filed a complaint on Tuesdayalleging Strauss-Kahn tried to rape her during an interview ina Paris apartment in 2003, when she was 22.