UPDATE 1-China drops import penalties on U.S. broiler chickens

* Move comes after WTO ruling in January

* China slapped duties on U.S. imports in 2010 (Adds detail, background)

BEIJING, Feb 27 (Reuters) - China's Commerce Ministry on Tuesday said it had removed anti-dumping and anti-subsidy duties on U.S. white-feathered broiler chickens, ending a years-long dispute between the world's largest economies amid growing tensions over agricultural trade.

The move, effective on Tuesday, comes after a World Trade Organization ruling in January that obliged Beijing to lower the tariffs unless it appealed within 20 days.

The tariffs were first imposed in 2010 and were extended for a further five years in 2016.

The removal of penalties comes against the background of an escalating trade spat between the two countries, after Washington slapped duties on washing machines and solar panels, triggering a probe by Beijing into U.S. sorghum, in what was widely seen as retaliation.

That has fueled concerns in the industry that soybeans might be caught up in trade action.

China's ban introduced in 2015 on U.S. poultry, poultry products and eggs imports due to avian influenza remains in place. (Reporting by Josephine Mason, Dominique Patton and Hallie Gu; Editing by Tom Hogue and Joseph Radford)