UNIVERSAL CITY, CALIF., SEPT. 25 -- A huge Japanese electronics concern said today that it is negotiating to buy entertainment giant MCA Inc. in a deal valued at $7 billion, the latest move in Hollywood globalization.

The proposal by Matsushita Electric Industrial Co. also demonstrates anew the foreign craving for American trophy holdings.

The merger, if completed, would mirror the 1989 acquisition of Columbia Pictures Entertainment by Japan's Sony Corp. for $5 billion.

One of the world's largest electronics manufacturers, Matsushita makes video equipment and audio and visual components under the brand names Panasonic, Technics and Quasar.

MCA owns Universal Pictures, a record and book publishing division, theme parks, real estate and a robust television division.

In Japan, a Matsushita official who spoke on condition of anonymity said MCA was one of the companies with which Matsushita is involved in talks, but said nothing had been decided. He said he could not comment further.

Later, MCA issued a statement in which it confirmed it is "in discussions with a major international company regarding a possible negotiated acquisition of MCA."

"The discussions are continuing on a friendly basis. No agreement has been reached. There is no assurance that an agreement will be reached," the statement said.

Two MCA board members said in interviews that they could neither confirm nor deny that a deal with Matsushita was being discussed. MCA President Sidney Sheinberg did not return telephone messages.

In today's edition, the Wall Street Journal said Matsushita was offering between $70 and $80 a share for MCA stock, or a range of about $6.7 billion to $7.5 billion for the conglomerate.

Stock in MCA Inc., which struck a 52-week low of $34.12 1/2 in trading on the New York Stock Exchange Monday, surged $19.50 today, or more than 57 percent, to $54. Other entertainment stocks also advanced in trading, with Paramount Communications up $3.25 to $34.87 1/2 a share in trading on the New York Stock Exchange.

The new enterprise would merge Matsushita's entertainment hardware division with MCA's profitable movie and television divisions.

"The long-term advantages are that when you make hardware you can benefit from the software producer's success," said Jeffrey Logsdon, an entertainment analyst at Seidler Amdec Securities Inc. in Los Angeles.

"There's an insatiable consumer demand for entertainment software." Logsdon speculated that other suitors might follow Matsushita's bid.

More than a quarter of Matsushita's revenue is generated by sales of video equipment. Audio and electronic components combine for another 22 percent of revenue. The company had revenue of about $44.4 billion in the year ended March 31.

If completed, the MCA buyout could renew criticism of Japanese control of American assets that surfaced last year in the deals for New York's Rockefeller Center and Columbia Pictures Entertainment.

The merger also might face regulatory barriers. MCA owns independent television station WWOR in Secaucus, N.J., which a foreign company would be prevented from owning.

The two immediate beneficiaries of the sale would be MCA Chairman Lew Wasserman, who owns about 7 percent of MCA's shares and, with other officers, has control of about 11.6 percent of its stock, and record producer David Geffen, who sold his record label to MCA in May for $550 million. Geffen collected 1 million shares of preferred stock, convertible to 10 million shares of MCA common stock, or 12 percent of the company, in the transaction.

MCA earned $191.77 million on revenue of $3.38 billion last year, a 16 percent increase over earnings of $164.91 million and $2.9 billion in revenue during 1988. In its most recent quarterly earnings, the entertainment giant earned $44.8 million, up 7 percent from $41.9 million during the same period in 1989.

At the end of last year, MCA had approximately 17,000 employees.

Universal Pictures, the company's motion picture subsidiary, is known as one of Hollywood's more daring studios. Its films include the X-rated "Henry and June," Spike Lee's films, the boycotted "Last Temptation of Christ" and a variety of horror titles.

Other hits in the MCA vault include "E.T. the Extraterrestrial," "Jaws," "Back to the Future" and its two sequels, "The Sting," "Twins," "National Lampoon's Animal House" and "American Graffiti."

These films continue to generate revenue in ancillary markets such as television and home video. MCA-Universal Home Video has 500 titles in its library.