UPDATE 1-Opel restructuring must be driven by economics-EU

* EU says Opel overhaul should ensure long-term viability

* Commission says German pre-condition was a problem

* Some analysts say case strengthens Commission position

* Others see case as a missed opportunity

(Adds quotes, lawyer, think-tank comments)

By Foo Yun Chee

BRUSSELS, Nov 4 (Reuters) - European Union competition regulators urged U.S. carmaker General Motors [GM.UL] on Wednesday to draft a recovery plan for its European arm, Opel, that would ensure its long-term viability.

They dismissed any suggestion that EU regulatory action could have been a factor in GM's decision to scrap a deal to sell Opel to Canadian car parts supplier Magna (MGa.TO) and Russia's Sberbank (SBER03.MM).

The EU executive, the European Commission, had challenged the terms of the funding Germany pledged to support the sale of Opel, forcing Berlin to clarify that the aid would have been available to anyone who had bought the company.

For the latest news and analysis on automakers, click on [ID:nCARS1]

"The Commission expects the new GM restructuring plan to be based on solid economic grounds, in order to ensure the long-term viability of Opel and sustainable jobs for Opel's workers," the Commission said in a statement.

It said it would verify that any financial aid given by any EU countries to Opel complied with EU rules.

European Competition Commissioner Neelie Kroes has often stated during the global economic crisis that state financial support to prop up struggling industries and companies must comply with EU rules.

GM said on Tuesday it was pulling out of the deal with Magna and Sberbank, and attributed the decision to improving business conditions and Opel's strategic importance. [ID:nSP536647]