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EU to warn Honduras of further sanctions over coup

* EU warns of further sanctions after July measures

* Calls for peaceful settlement ahead of elections

BRUSSELS, Sept 10 (Reuters) - The European Union will warn the de facto government of Honduras next week that it could face further sanctions unless a peaceful solution is found to a crisis triggered by the coup against President Manuel Zelaya.

A draft statement due to be approved by EU foreign ministers meeting in Brussels on Monday said the 27-nation bloc would continue to restrict political contacts with the de facto government installed after the June 28 military takeover.

In July, the European Commission said it was suspending all budgetary support payments to Honduras after the failure of efforts to resolve a crisis. It has also suspended development assistance.

"Until a peaceful settlement is found, the EU will stand ready to take further restrictive measures, including targeting those members of the de facto government who are seen to be blocking progress on a negotiated solution," the statement, seen by Reuters, said.

The statement reaffirmed EU support for mediation by Costa Rican President Oscar Arias and the Organization of American States and urged all sides to work for a peaceful negotiated solution and the restoration of constitutional order ahead of November elections.

The statement also expressed deep concern about reported human rights violations, including threats to rights activists, arbitrary detentions and repression of peaceful demonstrators.

The United States announced last week it was terminating more than $30 million in non-humanitarian aid to Honduras to pressure the de facto government to step down and reinstate Zelaya, who is in exile.

Reporting by David Brunnstrom, Editing by Lin Noueihed

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