* Germany worries deep emission cuts would hit car industry
* France, Netherlands and others call for ambitious action
* U.N. climate panel says drastic change needed
* EU nations say "deeply concerned" over UN report (Updates with results of council)
LUXEMBOURG, Oct 9 (Reuters) - European Union nations, voicing concern over a U.N. report on global warming, agreed on Tuesday to seek a 35 percent cut in car emissions by 2030, as Germany warned that overly challenging targets risked harming industry and jobs.
Torn between reducing pollution and preserving industry competitiveness, EU environment ministers meeting in Luxembourg talked for more than 13 hours until nearly midnight to reach a compromise over what 2030 carbon dioxide limits to impose on Europe's powerful carmakers.
The final rules will now be hashed out in talks beginning on Wednesday with the EU's two other lawmaking bodies: the European Parliament, which is seeking a more ambitious climate target, and the European Commission, which proposed a lower one.
In a joint statement earlier, the EU ministers expressed deep concern over a U.N. report calling for rapid and unprecedented action to contain global warming but held back from increasing their pledge to reduce emissions under the 2015 Paris climate accord.
Several countries had sought a higher, 40 percent reduction in car emissions, in line with targets backed by EU lawmakers last week, with Ireland and the Netherlands among those voicing disappointment with the compromise deal.
Germany, with its big auto sector, had backed an EU executive proposal for a 30 percent cut for fleets of new cars and vans by 2030, compared with 2021 levels.
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Climate campaigners say Germany has still not learned to be tougher on the auto industry, despite the scandal that engulfed Volkswagen in 2015 when it admitted to using illegal software to mask emissions on up to 11 million diesel vehicles worldwide.
Germany, with the backing of eastern European nations, had held a blocking minority among the 28 nations against the more ambitious targets, EU sources said.
But a last-minute amendment helped ease concerns among poorer member states over the new rules, which also create a crediting system encouraging carmakers to raise sales of electric cars.
It would allow for a different accounting in countries where the current market penetration of zero- and low-emissions vehicles is less than 60 percent below the average in the bloc.
Curbs on the transport sector, the only industry in which emissions are still rising, aim to help the bloc meet its goal of reducing greenhouse gases by at least 40 percent below 1990 levels by 2030.
Extreme temperatures across the northern hemisphere this summer have fuelled concerns climate change is gathering pace, leading some countries to call for emissions to be cut at a faster rate than planned.
But a call by the EU's climate commissioner and 15 EU nations for the bloc to increase its pledge to cut emissions by 45 percent under the Paris accord has met with resistance.
Ahead of U.N. climate talks in Poland in December, the bloc's 28 environment ministers renewed their commitment to leading the fight to limit global warming.
They said the EU was ready to "communicate or update" its Nationally Determined Contribution, the efforts by each country to reduce emissions, by 2020.
Raising it would require the approval of all 28 nations.
That may be too hard to achieve before the U.N. talks, European Commission Vice President Maros Sefcovic said, but the bloc is likely to exceed its Paris pledge following a reform of its Emission Trading System (ETS) and new targets on renewable energy and energy efficiency.
"We do not need new legislation on this one because everything is already done. We are just going to get better results than expected," Sefcovic told Reuters on Monday. (Reporting by Daphne Psaledakis; Additional reporting by Peter Maushagen and Alissa de Carbonnel in Brussels; Editing by Edmund Blair, Mark Potter and James Dalgleish)