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UPDATE 2-UK says security and jobs key to EADS-BAE merger

(Adds dispute over location of headquarters)

BIRMINGHAM, England, Oct 7 (Reuters) - The proposed $45billion merger between EADS and BAE Systemsmust ensure British security and jobs are preserved, financeminister George Osborne said on Sunday, just three days before adeadline for detailing the deal.

Tensions over the supermerger have spilled into the open inrecent days as France, Britain and Germany jockey over the roleof the state in what would be the world's largest aerospace andarms group.

"Our approach to this has been to make it very clear thatour priorities are of course the national security of the UnitedKingdom, second: jobs and investment in the UK," financeminister George Osborne told Sky television.

"Those are the tests against which we are judging theproposal brought to us by these two companies," Osborne said.

EADS and BAE announced plans for a merger last month, buttheir efforts have become snagged on differences over controlbetween France and Germany, while there are also politicalconcerns about jobs.

A person familiar with the negotiations said one of thepoints in dispute was where the new group would be based.

The German government would like an important part of thecompany, or indeed possibly its headquarters, to be based inGermany, the source said, adding: "It's like a round ofcollective bargaining".

Time is running out before a UK regulatory deadline of Oct.10 for a blueprint of the deal, which affects national securityinterests on both sides of the Atlantic.

(Reporting by Guy Faulconbridge, Additional Reporting by GernotHeller, Editing by Matt Falloon and Mark Potter)

((guy.faulconbridge@thomsonreuters.com)(+442075424758))

Keywords: EADS BAE/BRITAIN