UPDATE 1-British farmers seek damages over FMD outbreak

(adds government reaction)

LONDON, Oct 17 (Reuters) - Britain's National Farmers Union said on Friday legal action had been launched against a government-funded research facility seeking damages over last year's outbreak of foot-and-mouth disease.

"Many farming businesses were devastated by the impacts of the outbreak and this claim is about getting redress for those farmers," Peter Kendall, president of the National Farmers Union, said in a statement.

An investigation into the outbreak, in August 2007, highlighted biosecurity breaches at the Pirbright research centre in Surrey, southern England.

The action was brought by 14 farmers against Pirbright's operators, the Institute for Animal Health and Merial Animal Health Limited, and Britain's farm minister Hilary Benn as licensor and regulator of the facility.

Merial is a private company owned by U.S. pharmaceutical firm Merck (MRK.N) and French firm Sanofi-Aventis SA (SASY.PA).

It alleges IAH and Merial were negligent in allowing the foot and mouth virus to escape from the facility.

The farmers are seeking 1.5 million pounds ($2.6 million) although the NFU described them as lead claimants, adding a successful outcome might open the way for other farmers to seek damages over the outbreak.

Britain imposed livestock movement restrictions in a bid to control the spread of the disease. The European Union also banned all British exports of fresh meat, live animal and meat products.

The claim includes losses incurred through movement restrictions as well as livestock slaughter and the disposal of livestock products.

Britain's Department for Environnment, Food and Rural Affairs (Defra) said in a statement that statutory compensation had been paid where animals were slaughtered.

"While we cannot comment on the detail of this specific case, Defra will deny liability in this action," the ministry said.

(Reporting by Nigel Hunt; editing by Michael Roddy)