UPDATE 1-SkyePharma says Abbott ends U.S. Flutiform deal

* Drug faces high regulatory hurdles in United States

* SkyePharma not giving up on drug but needs new partner

* SkyePharma shares down 5 percent

LONDON, Aug 19 (Reuters) - Britain's SkyePharma (SKP.L) said Abbott Laboratories (ABT.N) has ended its deal to market SkyePharma's asthma drug Flutiform in the United States, after regulators imposed what could be insurmountable hurdles to approval.

Abbott had already handed over control of the U.S application to SkyePharma after the Food and Drug Administration (FDA) refused approval for the drug in January.

The FDA then set tougher-than-expected demands on the application in June, when it gave more details on the rejection. [ID:nLDE65N1A0]

"Given the delay in obtaining approval for Flutiform in the United States, we are not surprised that Abbott has decided to terminate its interest in the product," said Chief Executive Ken Cunningham on Friday.

SkyePharma said it had not given up on the drug in the United States, but if there were a viable way forward it would need a new partner to finance additional clinical work.

SkyePharma's shares, which have more than halved since the refusal, were down 5 percent at 38 pence by 0754 GMT.

The company has filed for approval for Flutiform in Europe and is also continuing with Phase III trials in Japan.

The inhaled drug, which is being developed for the treatment of asthma and chronic obstructive pulmonary disease, would if approved compete with GlaxoSmithKline's (GSK.L) market-leading Advair and AstraZeneca's (AZN.L) Symbicort. (Reporting by Paul Sandle, Editing by Rosalba O'Brien)