UPDATE 3-GM sale of Opel hits snag with EU regulators

* EU warns has concerns about German aid

* GM says closing of sale hinges on German financing

* Germany optimistic Opel deal will be signed soon (Recasts, adds comment from GM)

BERLIN/BRUSSELS, Oct 16 (Reuters) - A deal by General Motors Co [GM.UL] to sell its Opel unit to a group led by Magna International Inc MGa.TO hit a snag on Friday when European Union regulators challenged the terms of German government aid offered to support the deal.

European Competition Commissioner Neelie Kroes said in a letter to the German government that there were "significant indications" that Germany had made its offer of 4.5 billion euros ($6.7 billion) of financial aid to Opel contingent on Magna being chosen as the winning bidder.

That would run counter to European Commission rules, Kroes said in a letter sent to Germany's Economics Minister Karl Theodor zu Guttenberg.

Kroes said GM and the trust established to keep Opel separate from the automaker's recent bankruptcy in the United States should be given the chance to reconsider the September decision to sell a 55 percent stake in Opel to Canadian parts maker Magna and Russian state-owned bank Sberbank.

"GM and the Opel Trust should be given the opportunity to reconsider the outcome of the bidding process," Kroes said in a statement released late Friday in Brussels.

Under the current deal, GM would retain a 35 percent stake in Opel and workers would hold the remaining 10 percent.

If GM is forced to reopen the bidding for Opel, or the closing of the deal faces significant delays, Opel could face a cash crunch based on previous projections by the automaker.

A GM spokesman said completing the Opel sale would require the German government to win clearance for its proposed financing and for union workers to agree to cost cuts.

"We can't close a deal if we don't have the financing," GM spokesman Chris Preuss said in Detroit.

Earlier on Friday, Germany's Guttenberg had been upbeat about the prospect of a quick closing for the Opel deal.

Sources in Germany close to the transaction have said that the formal sale document was set to be completed by early next week.

"We still have to clear up a few things with the European Commission," Guttenberg told a news conference. "I think all players in the deal are very relaxed about this."

Both Austria and Poland have made written commitments on aid for GM's European unit, Guttenberg said.

He also said that there were positive signals coming from Britain, and that Germany was in a "constructive and very positive dialogue" with the Spanish government.

Germany had agreed to provide 4.5 billion euros in financing support under the condition that countries with Opel plants would agree later on how to divide that funding.

Spain's unions will respond to Magna's latest proposal for its Spanish factory on Monday, the head of the workers committee at the plant said on Friday.

Opel remains a major unresolved issue in GM's bid to restructure after a bankruptcy funded by the Obama administration that effectively nationalized the automaker with $50 billion in U.S. government funding.

GM's European unit employs over 40,000 workers and has operations in Germany, Britain, Belgium, Poland and Spain.

European regulators had previously indicated that government aid for Opel that appeared to hinge on guarantees of saving jobs in a particular country would face scrutiny.

Before agreeing to sell control of Opel to Magna, GM's board had considered a rival bid from private equity investor RHJ International (RHJI.BR) or raising funds to keep the unit. (Reporting by Dave Graham and Sarah Marsh; Additional reporting by Kevin Krolicki in Detroit; Editing by Karen Foster, Gary Hill)