UPDATE 2-France, Germany set end-April deadline for elusive deal on new combat jet

(Adds comments by German defence minister)

PARIS, April 20 (Reuters) - French and German defence ministers on Tuesday set a deadline of the end of April to broker a deal over the future of a next-generation combat jet, Europe’s largest defence project.

Earlier this month, the European companies involved in the project concluded talks with an agreement on how to share work on the Future Combat Air System (FCAS), an array of manned and unmanned warplanes backed by France, Germany and Spain.

There are still differences over engine development and intellectual property rights.

“We both think the same thing: we need a deal by the end of April and I am confident we can get there together,” French Armed Forces Minister Florence Parly told a joint news conference after talks in Paris.

Parly described the political negotiations on the flagship European defence project as frank. German Defence Minister Annegret Kramp-Karrenbauer said there were “very tangible interests” at stake.

“We as politicians expect the industry to jointly find a viable basis (for the next steps of the project) which we can accept,” she added, saying there were various open questions such as the lack of an agreement about handling intellectual property.

“We have made it very clear again that we expect this in the coming days because otherwise we will run into problems sticking to the time frame. And we don’t want FCAS to be delayed for several months because we cannot start parliamentary discussions in time,” Kramp-Karrenbauer added.

The FCAS is designed to replace the Eurofighter, developed by Airbus, Britain’s BAE Systems and Italy’s Leonardo, and the Rafale made by France’s Dassault, from 2040.

The industrial agreement on the share of work saw Dassault Aviation win leadership of the fighter plane while Airbus, representing Germany and Spain, has a two-thirds overall share of the project.

Defence procurement is a sensitive topic in Germany, especially in an election year. The vote means the project faces tight deadlines in a country where the powerful parliamentary budget committee has a decisive say. (Reporting by Tangi Salaun, Benoit Van Overstraeten and Sabine Siebold; Writing by GV De Clercq and Richard Lough; Editing by Alison Williams, Peter Graff and David Gregorio)