* Berlin wants EU to reduce risks to deposits first

* Urges reworking of draft conclusions for EU summit

* EU summit set for Dec. 17-18 (Recasts with German reaction)

BRUSSELS/BERLIN, Dec 9 (Reuters) - Germany reaffirmed on Wednesday its opposition to European Commission plans for a bank deposit guarantee scheme and vowed to water down a draft for next week’s EU summit which foresees the gradual introduction of such a scheme.

In the draft conclusions for the Dec. 17-18 summit, seen by Reuters, European Union leaders will ask their finance ministers to urgently work on completing the EU’s banking union - a phrase used by officials to describe the deposit guarantee scheme.

But Germany, the EU’s biggest economy, does not want its depositors to help guarantee deposit pay-outs in the event of bank failures in other euro zone countries. It insists the EU must first take steps to minimise risks to deposits before the start of any talks on sharing responsibility at the EU level.

“The German government has made clear its opposition to a European deposit guarantee scheme,” Chancellor Angela Merkel’s spokesman Steffen Seibert said in a statement.

“In talks today on the draft it repeated this position and it will continue to do so,” he said.

Seibert said the draft conclusions quoted by Reuters had been presented on Wednesday for the first time at ambassadorial level and would be “discussed and reworked” many times before the EU summit next week.

At the last EU summit in October, Germany insisted on the removal of any reference to the European deposit guarantee plan.

The draft conclusions for this month’s summit had sought to address German concerns about collective responsibility.

“Further work on reducing risks in the banking sector and weakening the link between banks and sovereigns should advance in parallel with the gradual introduction of a European Deposit Insurance Scheme,” the draft text seen by Reuters said.

In the draft conclusions, EU leaders would also ask their finance ministers to seek swiftly to streamline EU budget rules, set up a European fiscal board and help to establish national competitiveness boards.

The ministers are also to strengthen the euro zone’s representation at the International Monetary Fund through better coordination of goals.

All these actions were proposed by the European Commission in October as part of a roadmap for closer integration of the single currency area - the Economic and Monetary Union - in order to minimise the chances of economic crises in the future. (Reporting By Jan Strupczewski and Alastair Macdonald; Editing by Gareth Jones)