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UPDATE 1-U.S. Justice Dept staff recommends blocking T-Mobile-Sprint deal, sources say

sources say@ (Adds details)

WASHINGTON, May 22 (Reuters) - The U.S. Justice Department's antitrust division staff has recommended the agency file a lawsuit to block T-Mobile US Inc's $26 billion acquisition of smaller rival Sprint Corp, according to two sources familiar with the matter.

The final decision on whether to allow two of the four nationwide wireless carriers to merge now lies with political appointees at the department, headed by antitrust division chief Makan Delrahim.

Sprint share prices fell 6.2% in premarket trading.

The Justice Department is expected to make a final decision in about a month, the two sources said.

But while Justice Department staff balked at the merger, the Federal Communications Commission indicated on Monday that it had reached an agreement in principle with the companies to allow the deal after the companies agreed to sell Sprint's prepaid brand Boost Mobile.

Justice Department staff at the antitrust division, who remain in their jobs even when administrations change, have long been expected to be skeptical of the proposed merger.

They fear that after the deal T-Mobile will no longer aggressively seek to cut prices and improve service to woo customers away from market leaders Verizon Communications Inc and AT&T Inc. (Reporting by Sheila Dang and Diane Bartz; Editing by Chizu Nomiyama and Jeffrey Benkoe)