UPDATE 2-Intel offers concessions to EU on McAfee

* European Commission extends review deadline to Jan. 26

* Intel says expects McAfee purchase to close in 1st half

* McAfee shares up 1.8 pct, Intel shares down 0.8 pct (Adds comment from Intel spokesman, anti-trust expert)

BOSTON/BRUSSELS, Jan 6 (Reuters) - Intel INTC.O has offered concessions in a bid to win European Union antitrust clearance for its $7.7 billion purchase of security software maker McAfee Inc MFE.N.

Shares in McAfee, the world's No. 2 maker of security software after Symantec Corp SYMC.O, rose 1.8 percent on the news on Thursday, while Intel shares fell 0.8 percent.

The Commission, the regulatory watchdog of the 27-nation European Union, said on its website that it has extended the deadline to Jan. 26 from Jan. 12 after commitments to deal with competition concerns were submitted.

“We’re continuing to work with the Commission,” Intel spokesman Chuck Mulloy told Reuters. “Our expectation continues to be that we get this matter completed sometime in the first half of 2011.”

He would not comment on what concessions Intel has made in its efforts to win approval of what would be its largest ever acquisition.

The commission is concerned that Intel might embed certain elements of McAfee’s virus-fighting technology in its widely used microprocessor chips for personal computers, giving it an unfair advantage over rivals, according to two people familiar with the case.

John Briggs, a Washington-based antitrust expert with Axinn Veltrop Harkrider LLP, said he suspected that Intel had agreed to take steps to make sure McAfee’s competitors could still get onto computers before they were sold to consumers and businesses.

Anti-virus software makers frequently forge deals with PC makers to get their software on the desktops of new personal computers. Analysts say that is one of the most effective routes by which they sell their software.

“I’m reasonably confident that what Intel has agreed to do is to give competitors of McAfee access to the desktops of computers that has McAfee already built into the microprocessor.”

Intel already won clearance for the deal from the U.S. Federal Trade Commission on Dec. 21.

Intel’s plan to buy McAfee underscores how security has become a concern in a world of Web-enabled devices. Swallowing McAfee would give Intel the opportunity to sell high-profit security software alongside its microprocessors to its traditional PC customers.

Analysts say Intel could differentiate its processors by designing chips that speed up the security scans typically performed by McAfee software or creating technology that makes gadgets less vulnerable to attacks by hackers.

European regulators are concerned that doing so might create an unfair advantage for Intel over rivals such as Symantec, according to the sources familiar with the case. (Additional reporting by Noel Randewich in San Francisco; Editing by Gary Hill)