* Luxembourg central banker to take up post on ECB's executive board
* Move could strain relations with European Parliament, which objected
* Mersch is inflation-fighting hardliner close to Bundesbank (Adds comments from EU lawmaker, details)
By John O'Donnell and Robin Emmott
BRUSSELS, Nov 23 Luxembourg's Yves Mersch won a top post at the European Central Bank on Friday after months of dispute with lawmakers at the European Parliament who objected to his appointment because of a lack of women in the bank's senior ranks.
The decision by European leaders to press ahead with Mersch could strain their relations with the European Parliament, potentially hampering agreement on reforms needed to resolve the bloc's debt and banking crises and in which lawmakers have a say.
Early on Friday morning, the leaders meeting in Brussels approved the appointment of Mersch, who is currently the governor of Luxembourg's central bank. He will join the ECB's executive board on Dec. 15 for an eight-year term.
The decision had been held up by the European Parliament, which argued that member states have not tried hard enough to find suitable women for the position, and by Spain, which wanted its own candidate.
Last month, lawmakers in the parliament rejected Mersch's candidacy to the board that forms the nucleus of the ECB's policymaking Governing Council.
Mersch said in a statement that he was pleased with the result of "a very long procedure."
He said he was aware of the critical voices in the parliament and that its rejection had mainly - but not only - been an "expression of concern that a great deal remains to be achieved on gender balance".
His appointment angered some leading lawmakers.
"Citizens across the EU have been astounded to discover the lack of gender diversity in the ECB, and indeed in other EU organisations," said Sharon Bowles, who chairs the parliament's influential economic and monetary affairs committee.
"Today's decision undermines and discredits work being undertaken to make the EU's economic governance system more democratically accountable," she said in a statement. Bowles herself is applying to replace Mervyn King as governor of the Bank of England next year.
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TIME TO MOVE ON?
Martin Schulz, president of the European Parliament, struck a more muted tone in a speech to leaders. "When key positions are filled in the future, we expect you to observe the principle of gender parity," he said.
This tone was echoed by Hannes Swoboda, leader of the social democrat faction in the European Parliament, who said it was time to move on with reforms to end the debt crisis.
"The parliament and the countries have so many important things to do this year, such as the banking union and two-pack fiscal reforms," he said. "We will not now start to block things because of Mersch."
The moustachioed Luxembourger is an inflation-fighting hardliner whose views are close to those of the Bundesbank, the German central bank, which has lacked a close ally on the Executive Board since German Juergen Stark quit last year.
He sounded an optimistic note. "I am very confident that a constructive dialogue with the European Parliament will be pursued in the future," he said.
Spain, whose ECB Executive Board member Jose Manuel Gonzalez Paramo ended his term earlier this year, had also argued in favour of a woman taking the job. Economy Minister Luis de Guindos said Madrid wanted a Spanish candidate for the post.
Austria's Gertrude Tumpel-Gugerell and Sirkka Hamalainen of Finland are the only two women to have occupied posts on the ECB's Executive Board since it was set up in 1998. There are currently no women at the top of the central bank. (Additional reporting by Eva Kuehnen in Frankfurt; Editing by Hugh Lawson)