REUTERS: Mexico's del Toro to direct "The Hobbit"

STORY: Mexican filmmaker Guillermo del Toro was named on Thursday to direct two movies based on the J.R.R. Tolkien book "The Hobbit" to build on the blockbuster success of "The Lord of the Rings" series.

Plans to make a two-part precursor to "The Lord of the Rings" trilogy, based on Tolkien's three-volume follow-up to his "Hobbit" story, were announced in December after settlement of a bitter legal dispute cleared the way for the project.

Del Toro, whose credits include "Pan's Labyrinth" and "Blade II," will move to New Zealand for the next four years to work on both "Hobbit" films with executive producer Peter Jackson, who directed all three "The Lord of the Rings" movies, according to New Line Cinema and Metro-Goldwyn-Mayer Studios.

The studios have said that filming will begin in 2009, with tentative release dates set of 2010 for the first film and 2011 for the sequel.

The plans call for del Toro to work back-to-back on "The Hobbit" and its sequel, which will deal with the 60-year period between that story and "The Fellowship of the Ring," the first of "The Lord of the Rings" trilogy, the studios said.

"The Hobbit," which Tolkien wrote for his children and first published in 1937, is set in a fictional land called Middle-earth, inhabited by elves, dwarves, wizards and a diminutive race known as Hobbits, including the central character Bilbo Baggins.

Tolkien went on to write "The Lord of the Rings" 17 years later.

The three films based on those volumes grossed roughly $3 billion combined at box offices worldwide. The last installment in 2003, "The Return of the King," won 11 Oscars, including awards for best picture and best director for Jackson.

Jackson sued New Line, a unit of Time Warner Inc., claiming the studio had improperly accounted for the movie's profits and owed him money. That suit was settled, allowing "The Hobbit" and its sequel to go into development.

Del Toro was widely acclaimed for his work on the 2006 dark fairy tale "Pan's Labyrinth," which earned Oscar nominations for best foreign-language film and his screenplay. Like "Lord of the Rings," del Toro's story was populated with all manner of imaginary creatures.

His directing credits also include the big-screen comic book adventure "Hellboy," whose sequel is due for release this summer. He recently produced the critically lauded Spanish supernatural thriller "The Orphanage."

"We have long admired Guillermo's work and cannot think of a more inspired filmmaker to take the journey back to Middle-earth," Jackson and his producing partner, Fran Walsh, said in a statement.