UPDATE 1-EADS denies backing out of U.S. tanker contest

(Recasts with EADS denial)

BERLIN, Sept 13 (Reuters) - Airbus parent EADS denied on Saturday it was thinking of abandoning efforts to supply air tankers to the United States after a German weekly reported it was threatening to walk away from the fraught tender process.

Der Spiegel reported the European group was frustrated by Washington's decision to cancel a $35 billion contract with EADS (EAD.PA) and partner Northrop Grumman (NOC.N) and delay a new contest between them and Boeing until after the U.S. election.

"We will only bid if we can be sure that we stand a fair chance," the weekly quoted a senior EADS manager as saying, referring to the competition's future next year.

EADS responded it was not giving up on the competition and repeated the thrust of a statement it had issued last week.

"We are carefully assessing the situation with Northrop Grumman and we remain steadfastly behind our partner," a group spokesman said.

"We are not giving up and we remain convinced we have the best plane."

U.S. Defense Secretary Robert Gates canceled the competition between Northrop and Boeing on Wednesday, saying it was impossible to decide the bitterly fought contest before President George W. Bush's administration leaves office in January.

Northrop had bid for the contract alongside EADS, whose Airbus unit would supply the A330 passenger jets to be converted into mid-air tankers by in Northrop. Boeing (BA.N) had offered a modeified version of its 767 airliner.

A decision to award Northrop and EADS the deal earlier this year caused a storm in Congress and was successfully challenged by Boeing, which asked for more time before the race is re-run.

(Reporting by Kerstin Gehmlich, Tim Hepher; editing by Michael Roddy)