UPDATE 3-Dassault source denies reported Libya Rafale order

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PARIS, Jan 14 (Reuters) - A French newspaper reported on Sunday that Libya wanted to order up to 18 Rafale fighter jets from France but a source close to the aircraft's maker Dassault Aviation AVMD.PA denied that a deal was imminent.

The weekly Journal du Dimanche, citing a source close to the Libyan government, said Libya wanted to order between 13 and 18 Rafale fighter jets from France in a deal worth up to 2.5 billion euros ($3.24 billion).

No comment was immediately available from either Dassault Aviation AVMD.PA, makers of the multirole Rafale aircraft, or the French government but a source close to the company said that no firm talks were underway.

The source said the aircraft had been shown by the French air force at an aerospace fair in Tripoli in December but that no firm deal was immediately in the offing.

“The presentation of the Rafale by the air force in December was part of the normal promotion of the Rafale abroad but there are no discussions and no negotiations,” the source, who declined to be named, told Reuters.

The Rafale is France’s next generation, multirole combat aircraft, combining both fighter and bomber roles and has been a flagship programme for France’s arms industry but has had problems in finding export buyers.

The 34 billion euro Rafale programme has been shortlisted several times but orders so far have been confined to France’s own navy and air force, despite a major export push backed by President Jacques Chirac.

It lost out last year when Saudi Arabia sealed a 6 billion pound ($11.61 billion) deal to acquire up to 72 Eurofighter jets from a multinational consortium that includes Airbus parent EADS EAD.PA, BAE Systems and Alenia Aeronautica, part of Italy's Finmeccanica SIFI.MI.

U.S. rival Boeing BA.N has also beat it to major deals in Singapore and South Korea.

Libya emerged from international isolation from 2003 when it accepted responsibility for the Lockerbie airliner bombing over Scotland and announced it would abandon its nuclear weapons programme. Most U.S. sanctions were lifted in 2004.

In 2004, the European Union lifted an arms embargo against Libya imposed in 1986.