2ND UPDATE: Warner Bros closed a deal late last night for Battle: Los Angeles director Jonathan Liebesman to direct Clash of the Titans 2. Production begins February 1 in the UK and possibly Iceland at a budget comparable to the $130 million spent on the original. I’d written yesterday about the ongoing talks that were stuck on money. Later in the day, they found a common ground–the studio came up with more dough. The sequel is a natural considering that the protagonists played by Sam Worthington and Gemma Arterton survived, and the original grossed nearly $500 million worldwide. But Clash benefited by being one of the first major live action films to get a 3D retrofit. I don’t think I’ve ever heard anybody say they actually liked the movie, and there were many complaints that the hasty 3D conversion was less a quality breakthrough than a gimmick reminiscent of that short-lived trend of “colorizing” B&W films. Warner Bros and Legendary will try to do better on the sequel. While reports say that means actually shooting in 3D, reliable sources tell me that’s not the case. Liebesman will shoot in 2D, but Warner Bros and Legendary will spend to get a better transition to 3D which should make the mythical creatures more fun than, say, the cheesy-looking piranha currently swimming across movie screens. Liebesman’s deal was made by CAA, Principato Young and attorney Karl Austen.

EARLIER: Right now, little is going on in town beyond the race to lock down directors on fast-mobilizing tent poles. Warner Bros and Legendary Pictures continue trying to work out a deal for Battle: Los Angeles director Jonathan Liebesman to direct a sequel to Clash of the Titans. The studio has been working on a sequel since the original grossed more than $500 million worldwide. But it was clear since last April that the film’s original director, Louis Leterrier, wasn’t going to return for a reprise. I’m told they are far apart on money. Leterrier has been meeting on blockbusters, and was Fox’s fall back choice after the studio met directors for X-Men Origins: First Class when Matthew Vaughn dropped out for a weekend, and then came back to accept the assignment.

On the X-Men: Wolverine 2 front, 20th Century Fox is between David Slade and Darren Aronofsky, I’m told. Slade, who just directed the summer hit The Twilight Saga: Eclipse, met over the weekend with Hugh Jackman on location where he is shooting Real Steel for DreamWorks. Aronofsky has also been talking with Jackman, and they have a good relationship that dates back to The Fountain, when Jackman stepped in after Brad Pitt dropped out. Jackman holds a lot of clout in the decision and while Aronofsky has some momentum of his own because of Black Swan, I’d say Slade has the edge. He is coming off a big summer movie with large-scale effects, which makes the studio comfortable. Fox went with Gavin Hood on the first Wolverine, and while he came from the Oscar-winning South African film Tsotsi, it was quite an adjustment moving into a tent pole sized undertaking, and Aronofsky has a similar prestige film background. Robert Schwentke, who created Comic-Con buzz for his film Red, had been in the mix – he was going to meet Jackman in Detroit along with Slade last weekend — but he opted out of the competition. Instead, Schwentke is eyeing projects that include Robert Ludlum’s The Osterman Weekend and Universal’s Ryan Reynolds-starrer RIPD as possible next pictures.

Reynolds also wants to star in the Wolverine spinoff film Deadpool. Fox hopes Robert Rodriguez will direct it but scheduling is an issue. Reynolds just signed to star with Denzel Washington early next year in Safe House, which starts early next year around the time Fox hoped to get Deadpool underway. I just spoke with Rodriguez. He said he has read the Deadpool script and likes it, but his own obligations promoting Machete and then directing Spy Kids 4 has made his participation tenuous. “They are trying to make a certain small window that’s going to be tough because of Spy Kids,” Rodriguez told me. “If they push it back, it would be a lot better for me.”

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