* Russia spurns terms meant to skirt territorial dispute
* June 30 deadline for OSCE exit from all of Georgia looms
* Moscow insists on separate OSCE mission for S.Ossetia
(adds detail, quotes, context)
By Mark Heinrich
VIENNA, May 13 (Reuters) - Russia on Wednesday vetoed a plan for keeping monitors from Europe's top security and human rights watchdog in Georgia, insisting on terms that drove home its view of breakaway South Ossetia as an independent territory. As a result, talks in the 56-nation Organisation for Security and Cooperation in Europe on salvaging the OSCE mission are likely to be suspended, with a June 30 deadline for monitors to quit Georgia looming, a senior European diplomat said.
Moscow sent in troops to repel Georgia's move to retake South Ossetia in a war last August, then blocked an extension of the OSCE's observer mandate in Georgia on its Dec. 31 expiry.
U.S. and European Union officials regard an OSCE presence in Georgia as crucial to preventing further fighting between separatist and Georgian forces and mistreatment of civilians.
Concern about resurgent tensions between Russia and the West has piled pressure on current OSCE chairman Greece to come up with a compromise palatable to all member states including Russia and Georgia.
On Monday, Greece floated a revised plan omitting mention of Georgia or South Ossetia, skirting the hot issue of the separatist region's status, while stipulating free movement for monitors across the August ceasefire line.
JUGGLING RUSSIAN, GEORGIAN DEMANDS
This approach signalled that Russia's demand for recognition of South Ossetia as an independent state should be addressed at separate "status" talks in Geneva, while accommodating the insistence of Georgia and its Western allies on Georgian territorial integrity and a single OSCE mission in the country.
But Russia turned this down and answered with its own version, making clear that Moscow deemed tiny South Ossetia to be no longer part of Georgia, a former Soviet republic.
Moscow's version, obtained by Reuters from diplomats in the confidential consultations, crossed out references to "free and unimpeded contact and movement" across the truce line.
It added that such movement must be agreed with "relevant authorities" -- meaning the rebels and Russians -- while monitors based in South Ossetia and in state-controlled Georgia would be under separate commands.
Diplomats said all member states embraced Greece's proposal except Kazakhstan and Belarus, which were non-committal but voiced no opposition.
The European diplomat told Reuters that Greece was expected to announce a suspension of monitor talks on Thursday but say its proposal remained on the table for Russia to reconsider.
"(Greece's) draft .. may not be perfect but it is the most plausible because it is status-neutral, meaning it avoids sensitive political or geographical terms," he said.
"(This was) carefully crafted with the full involvement of all interested parties" in five months of talks, he added.
After the August war, Russia recognised South Ossetia and Abkhazia, another Russian-aligned separatist region of Georgia, as independent states. Both had broken away from Georgia in early 1990s wars after the collapse of the Soviet Union.
In the latest chapter of renewed friction, NATO has begun military exercises in aspiring member Georgia, prompting Russian accusations of dangerous muscle-flexing by the Western alliance.