* Arms firms cooperate under Anglo-French defence pact
* European firms compete for growing unmanned plane spending
* Unmanned aircraft could help with disaster relief
(Recasts, adds details and background)
PARIS, March 14 The prospect of an Anglo-French unmanned spy plane detecting threats and launching weapons to support military operations came a step closer on Monday as two major arms companies deepened co-operation in developing drones.
Britain's BAE Systems (BAES.L) and Dassault Aviation (AVMD.PA) of France announced a memorandum of understanding to work exclusively on a medium-altitude, long-endurance (MALE) drone capable of serving western Europe's two leading powers.
Such unpiloted aircraft can loiter high over the battlefield on the lookout for threats and are sometimes loaded with weapons. Europe has been involved for some time in piecemeal efforts to develop a home-built successor to the U.S. Predator built by General Atomics, which is widely used in Afghanistan.
BAE, which helps build the Eurofighter jet, and Dassault, builder of the Rafale, compete to sell conventional fighter jets but were nudged into co-operation on drones when Britain and France signed a major defence co-opperation pact in November.
Their drone would be based on a prototype platform already developed by BAE called the Mantis, a twin turboprop-powered unmanned aircraft designed in the shape of the predatory insect.
The cost of the BAE-led joint development is expected to be in the hundreds of millions of dollars, rather than billions, but is seen as potentially the biggest Anglo-French military air co-operation venture since the Jaguar fighter over 40 years ago.
Potential exports have been valued in the billions.
The BAE/Dassault drone faces competition, however, from the jet-powered Talarion MALE drone offered to France, Germany and Spain by European aerospace group EADS EAD.PA.
EADS, which is funding the development, has called for a quick political decision on the programme's future.
At stake is the control of highly sensitive technology that could define the shape of unmanned fighter jets of the future.
An EADS spokesman declined immediate comment.
Unmanned aircraft with sophisticated cameras and sensors are increasingly in demand to support military operations worldwide.
They can also be deployed to hunt for survivors after natural disasters like the Japanese tsunami, freeing helicopters to carry food and water, judging by gaps in capability identified during the 2004 tsunami in Asia. [ID:nN20104347]
Britain and France have yet to define exactly what their military need. France said it would announce in February which companies it would buy from to meet its interim needs but the decision appeared to slip back amid a government reshuffle.
Global spending on unmanned aircraft is expected to total $103.5 billion between 2011 and 2020, according to data from Virginia-based Teal Group. Over three quarters of this comes from the United States and only 10 percent from Europe.