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UPDATE 1-Merkel sees no threat in new gas pipe to Russia, Poland disagrees

* Germany and Poland disagree over planned pipeline

* Merkel says Nord Stream 2 is no threat to diversification

* Says wants Ukraine to retain gas transit traffic

* Poland fears increased dependence on Russian gas (Adds quote from Polish PM, details)

BERLIN, Feb 16 (Reuters) - The planned Nord Stream 2 gas pipeline connecting Germany and Russia poses no threat to Europe's energy security, Chancellor Angela Merkel said on Friday, publicly disagreeing with her Polish counterpart.

Poland, Ukraine and Baltic states fear the pipeline to be laid under the Baltic Sea would increase Europe's dependence on Russian gas and could cut off Ukraine - still fighting a conflict with Russian-backed separatists - from gas transit fees.

"We had different views on the Nord Stream issue," Merkel told reporters at a joint press conference with Polish Prime Minister Mateusz Morawiecki in Berlin.

"We think this is an economic project. We are also for energy diversification. We also want Ukraine to continue to have transit gas traffic, but we believe Nord Stream poses no danger to diversification," she added.

Morawiecki said he disagreed that Nord Stream 2 would diversify supply.

"This is gas from the same source, but via a different route. We indicate the risks related to cutting Ukraine from transit," he said, adding however that Merkel's comments on assuring Ukraine's gas traffic fees were important.

Morawiecki has called for the United States to impose sanctions on the planned pipeline, which U.S. Secretary of State Rex Tillerson said last month the U.S government sees as a threat to Europe's energy security.

The United States has already sanctioned Russian companies over Moscow's involvement in the Ukraine conflict, and foreign companies investing in or helping Russian energy exploration.

Separately, Nordic nations have voiced security concerns over the pipeline being laid near their shores under the Baltic.

Germany and Austria have focused more on the commercial benefits of having more cheap gas, arguing there could be little harm from an additional pipeline.

German energy groups Uniper and Wintershall, Austria's OMV, Anglo-Dutch group Shell and France's Engie have invested in the 1,225 km (760 mile) pipeline.

Poland and Baltic states, which spent more than four decades under Soviet domination after World War Two, see Russia as a potential security threat. (Writing by Paul Carrel and Marcin Goettig; Additional reporting by Marcin Goettig in WARSAW; Editing by Adrian Croft)