UPDATE 1-EU exec set to okay UAL, Continental deal - source

* EU expected to give unconditional approval

* Airlines have not offered concessions to EU regulator

* U.S. regulators reviewing the deal

(Adds EU Commission no comment, background)

By Foo Yun Chee

BRUSSELS, July 22 (Reuters) - United Airlines is expected to win unconditional EU approval next week for its $3.17 billion buy of Continental Airlines Inc CAL.N to form the world's largest carrier, a source close to the case said on Thursday.

The two airlines unveiled the deal in May, saying the combined company would fly to 370 destinations and have 10 hubs worldwide, helping it to attract more business travellers. [ID:nN02143069]

"This is expected to be a phase 1 clearance," the source said, adding the airlines had not offered any commitments to the regulator as there were no direct overlaps between the carriers in Europe.

The European Commission, the antitrust watchdog in the 27-country European Union, approves mergers and acquisitions without an in-depth investigation in phase 1 if it finds that the deal does not harm competition.

The EU executive has set a July 27 deadline for its decision. It granted unconditional approval of U.S. carrier Delta Air Lines' (DAL.N) acquisition of rival Northwest Airlines in 2008, saying the deal would not significantly affect competition.

The Commission declined to comment on Thursday.

U.S. regulators are mow reviewing the deal.

Some U.S. senators are strongly opposed to it, saying it would hurt consumers and reduce competition. Congress cannot block the transaction but can influence regulators and public opinion.

The airlines expect to close the deal before the end of 2010.

United and Continental expect to generate between $1 billion and $1.2 billion in annual sales and cost benefits by 2013.

The global downturn has taken a steep toll on the airline industry, which has also been battling with volatile fuel prices, low-cost competition and overcapacity. The industry is now starting to recover.

United's parent UAL Corp UAUA.O posted on Tuesday its first quarterly operating profit since 2007. (Reporting by Foo Yun Chee, editing by Will Waterman)