UPDATE 2-StanChart told to say sorry over US sanctions comments

* Manhattan District Attorney demanded public statement from bank

* StanChart violated deferred prosecution agreement-Manhattan office * StanChart chairman "very much" regrets March 5 comments

* Comments were about past breaching of U.S. sanctions on Iran

(Releads with comment from U.S. authorities, adds details)

By Steve Slater

LONDON, March 21 (Reuters) - Standard Chartered bowed to pressure from U.S. regulators and apologised on Thursday for comments by the bank's chairman appearing to deny responsibility for breaching U.S. sanctions on Iran.

The highly unusual retraction and apology was forced on the bank by U.S. authorities, the Manhattan District Attorney's Office said.

In a $667 million settlement of charges it broke U.S. sanctions against Iran, London-based Standard Chartered last year agreed to deferred prosecution agreements with the U.S. Department of Justice and Manhattan District Attorney's Office.

"As part of these agreements, we rigorously monitor the banks for continued compliance, and subsequently addressed this violation by Standard Chartered Bank for not accepting responsibility for its misconduct," said Joan Vollero, deputy director of communications for the Manhattan District Attorney.

"Under the terms of our agreement, we demanded a public repudiation and they complied."

Standard Chartered Chairman John Peace said on March 5 at a press conference with reporters that the bank "had no wilful act to avoid sanctions".

In Thursday's statement he said those comments were "both legally and factually incorrect" and he retracted them.

He said they directly contradicted the bank's acceptance of responsibility.

"To be clear, Standard Chartered Bank unequivocally acknowledges and accepts responsibility ... for past knowing and wilful criminal conduct in violating U.S. economic sanctions laws and regulations," Peace said.

He said he "very much" regretted his earlier comments, which "were at best inaccurate".

The bank said the statement followed discussions with the U.S. Department of Justice and the Manhattan District Attorney's Office. It declined further comment.

The settlements by Standard Chartered related to transactions for customers in sanctioned countries Iran, Sudan, Libya and Burma between 2001 and 2007.

U.S. authorities accused the bank of leaving out information from U.S. dollar wire payments, preventing regulators from identifying suspicious activity.

UK politicians and regulators were angered by the aggressive action of New York banking regulator Benjamin Lawsky against the bank. Lawsky's actions also angered other U.S. regulators who had spent more than two years investigating the bank and wanted a more coordinated settlement before he made public his accusations in August.

The demand by U.S. authorities for Standard Chartered to issue a public apology is further evidence of the tough stance they are taking, and is a warning shot to other banks.

The Manhattan District Attorney's Office has reached six deferred prosecution agreements with European banks for violating U.S. sanctions over the past four years, including with HSBC , ING , Barclays , Credit Suisse and Lloyds .

(Editing by David Cowell)

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Keywords: STANCHART SANCTIONS/