UPDATE 2-Carstens touts long-shot bid for IMF top slot

* U.S. says still undecided on who to back for IMF job

* Carstens criticizes European hold on IMF slot

* Israeli PM says Fischer would make excellent IMF chief (Updates with background, quotes)

By Doug Palmer

WASHINGTON, June 13 (Reuters) - Mexican Central Bank Governor Agustin Carstens on Monday conceded he was a long-shot candidate to head the International Monetary Fund, but argued he would bring "a fresher pair of eyes" to the debt crisis in Europe.

Carstens said he knew chances were "quite high" that French Finance Minister Christine Lagarde would get the job left vacant by Dominique Strauss-Kahn's resignation.

The European debt crisis makes it hard to break the 65-year-old tradition of European leadership at the IMF, even though members agreed some time ago the next managing director should be selected on the basis of merit, Carstens said.

"That makes it more difficult. I'm not fooling myself. It's like starting a soccer game with a 5-0 score," Carstens said in remarks at the Peterson Institute for International Economics, following a meeting with U.S. Treasury Secretary Timothy Geithner.

Carstens emphasized the experience he would bring to the job and his plans for reforming the IMF, but also criticized Europe for abandoning its previously stated commitment to a transparent, unbiased and merit-based selection process the first time that was put to the test.

"Europe has decided not to act accordingly to this process this time around. You know they decided to support (Lagarde) before there was even candidates. So, it's hard to sort of see the consistency of what they have been claiming for so many years," he said.

Carstens, a University of Chicago-trained economist, met with top Indian officials last week, but has yet to pick up the endorsement of a major emerging economy outside Latin America.

Colombia and a dozen other Latin American nations have endorsed Carstens' bid for the IMF top job. [ID:nN08162375]

He said was running because developing countries have long wanted a larger voice in the fund and could only have a shot at winning the management slot if they put forward a candidate.

He heads next to China on a tour that has already taken him to Canada, Brazil, Argentina, Spain and Portugal.

Lagarde has the backing of European countries and on Sunday picked up an endorsement from Indonesia, the first big developing nation to publicly back her.

Carstens argued his distance from the European crisis, as well as his experience dealing with Latin American debt problems while working for the Mexican government and as an IMF deputy director gave him an advantage over Lagarde.

"I think in the case of Europe what would help me is to have a fresher pair of eyes. ... I think also someone coming from the outside would speak their mind more frankly and I think that would be an advantage," Carstens said.

A U.S. Treasury official said the United States had not yet decided who to support for the IMF post. A Treasury Department statement said Geithner believed Carstens had a strong mix of financial and political skills that made him "a capable candidate to head the IMF."

Carstens argued that strengthening IMF economic surveillance of member countries should be a priority for the next IMF managing director to help prevent future crises, and to ensure that advanced economies, which have long ignored IMF advice, listen to what the fund has to say.

"Financial sector problems are similar to high blood pressure. In medical terms high blood pressure is called a silent killer, and it is because you don't know you have the problem until it hits you," he said.

Stanley Fischer, governor of the Bank of Israel, also is challenging Lagarde for the post following Strauss-Kahn's resignation after being accused of sexual assault and attempted rape of a New York hotel maid.

Israeli Prime Minister Benjamin Netanyahu, at a news conference in Rome dismissed concerns that the 67-year-old Fischer, a former No. 2 at the IMF, may be too old for the job.

"Stan Fischer would be one hell of an IMF chief. ... He doesn't have an age handicap. He's very fit, mentally and physically," Netanyahu said after a meeting with Italian Prime Minister Silvio Berlusconi.

For Fischer to get the job, the IMF would have to change its rules that no one should be appointed managing director beyond the age of 65. (Reporting by Doug Palmer, Editing by Neil Stempleman and Leslie Adler)