* EADS looking for partner after second bid setback

* Must declare bid for U.S. tanker deal by May 10

* EADS still in talks with possible partners - sources

* Shares up 1.19 pct

By Tim Hepher

PARIS, April 16 (Reuters) - Twice-jilted EADS EAD.PA faced a dwindling set of options as the Airbus parent firm sought without a much-needed partner on Friday to preserve its hopes of bidding for a refuelling plane deal in the United States.

The European company has been left solo for the second time in as many months as it ponders a politically charged bid to challenge Boeing BA.N for an American defence deal worth up to $50 billion, sources close to the matter said.

EADS executives met a week ago with advanced plans to launch a bid with U.S. defence contractor L-3 Communications LLL.N as its key supplier. But sources said the U.S. company had backed away leaving a sombre mood in the European camp. [ID:nN15214199]

“Overnight they went from positive to more negative,” one person familiar with the matter said, asking not to be named.

L-3 declined on Thursday to comment about the talks.

An EADS spokesman said it continued to examine its options and declined further comment.

EADS shares were up 1.19 percent at 14.94 euros by 1300 GMT, outperforming the European market .STOXX.

EADS had been hunting for a partner after Northrop Grumman NOC.N withdrew support last month. A U.S. partner is necessary to install classified systems on Airbus A330 jetliners which would be assembled and adapted for air tanker use in Alabama.

EADS and Northrop won a previous U.S. Air Force tanker contest in 2008. The Pentagon cancelled the deal after government auditors upheld a Boeing protest and launched a new tender.

EADS must say by May 10 whether it intends to take part in the contest. Only a handful of companies are seen as likely partners and analysts said EADS faced the additional hurdle of mounting pressure ahead of Congressional elections in November.

“Given that the United States is looking more inward, the options for EADS are clearly running out,” said Howard Wheeldon, senior strategist at BGC Partners in London.

“I am reluctant to say it is the end of the road, but I am hard-pressed to find anyone else they can move in with as a junior or equal partner.”

EADS officials are still in talks with some U.S. companies, including possibly L-3 and Raytheon Co RTN.N, although time for sealing a pact is running out, according to several sources who were not authorized to speak on the record.

INDUSTRIAL BASE

Some U.S. analysts have blamed EADS’s difficulties on a wider dispute over aircraft subsidies and the size of its own plane. It has been heavily criticised in Congress after the World Trade Organisation (WTO) ruled it had received unfair civil jet subsidies.

Airbus supporters argue the issues are not linked and claim a preliminary confidential verdict on a European counter-suit at the WTO, due in June, will be equally embarrassing for Boeing.

Norm Dicks, a Democrat congressman from Washington, where Boeing would manufacture many of its tankers, said concerns over the health of U.S. industry outweighed the benefits of competition.

“Personally, I hope they don’t bid,” Dicks, chairman of the House of Representatives Defense Appropriations subcommittee, told reporters on Thursday.

“We’ve already had a competition. We know what their numbers are. I think that their plane’s too big.”

When Northrop withdrew, it said the Pentagon’s rules for the competition favoured Boeing’s smaller 767.

French President Nicolas Sarkozy said last month EADS would bid for the plane contract if the rules were fair and President Barack Obama said they would be both fair and transparent.

Defence sources said EADS had not given up on a bid but Wheeldon said the tensions may have longer-term implications.

"Apart from (Britain's) BAE Systems BAES.L, transatlantic consolidation led by Europe is now dead. There may still be some doors open to transatlantic consolidation led by the U.S., but not in the immediate future." (Additional reporting by Andrea Shalal-Esa, Jim Wolf; Editing by Sharon Lindores)