UPDATE 1-E.ON abandons sale of Italian gas grid as bids too low

*E.ON says bids were unattractive

*Says continuation of of Italian gas grid attractive

*Says overall divestment target unaffected

(Adds details, background)

FRANKFURT, April 22 (Reuters) - E.ON (EONGn.DE), Germany's largest utility, abandoned the sale of its Italian gas grid and decided to continue operating the business itself because the prices offered were "unattractive", it said.

E.ON had aimed to shed the 9,400 kilometer grid as part of a plan to divest assets worth 10 billion euros ($13.44 billion) by the end of the year.

The failed sale of the grid, which analysts have estimated to be worth less than half a billion euros, did not affect the the company's overall divestment target, E.ON said on Thursday. (Reporting by Matthias Inverardi in Duesseldorf; Writing by Peter Dinkloh)