UPDATE 1-Sarkozy slams U.S. for protectionism on tanker deal

* France's Sarkozy attacks U.S. over tanker plane contract

* Accuses Washington of protectionism

* UK's Brown also disappointed about the issue

(Adds Brown quotes, background)

By Estelle Shirbon

LONDON, March 12 (Reuters) - French President Nicolas Sarkozy accused Washington of protectionism on Friday in its handling of a $50 billion refuelling plane contract that looks likely to be awarded to U.S. aerospace giant Boeing (BA.N).

U.S. defence contractor Northrop Grumman (NOC.N) and its European partner EADS (EAD.PA) withdrew this week from a long-running competition to supply tanker planes to the U.S. Air Force, saying the rules favoured rival Boeing.

The top U.S. exporter is now the sole known bidder for the lucrative contract, which was awarded to Northrop and EADS two years ago in a deal that was later cancelled by the Pentagon.

Asked about the issue during a joint press conference with British Prime Minister Gordon Brown, Sarkozy delivered a scathing attack on how the United States had handled it.

"I did not appreciate this decision ... This is not the right way to behave," Sarkozy said.

"Such methods by the United States are not good for its European allies, and such methods are not good for the United States, a great, leading nation with which we are on close and friendly terms," he said.

"If they want to be heard in the fight against protectionism, they should not set the example of protectionism. There is what you say and then there is what you do."

France itself has a long tradition of favouring home-grown military suppliers and Sarkozy has intervened repeatedly to defend the interests of French firms against foreign competitors during his presidency and a previous stint as finance minister.

Since the global financial crisis of 2008 and ensuing economic downturn, governments have insisted it would be wrong for countries to retreat into protectionist bubbles, but there have nevertheless been a number of serious trade disputes.

"I too am disappointed about the American decision and we have made our views known about this as well," Brown said at the joint news conference with Sarkozy.

"We believe in free trade, we believe in open markets, we believe in open competition, and clearly it's a disappointment to us that the offer that has come from Europe has not found the favour we believed it deserved in the United States of America."

For EADS, the parent company of the Airbus plane-maker, the withdrawal was a setback in a major push to increase its presence in the U.S. military market.

Northrop's decision to withdraw put the tanker contract within Boeing's reach nearly nine years after the Air Force first mapped out a sole-source deal with Boeing that was later cancelled by Congress after a huge procurement scandal.

In February 2008, Northrop and EADS won the competition with a bigger A330-based plane, but the Pentagon cancelled that deal after government auditors upheld a protest by Boeing. (Additional reporting by Emmanuel Jarry and Adrian Croft; editing by Noah Barkin)