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EU Member States Divided on Tougher Engine Tests

* Germany says thoroughness more important than speed

* Denmark backs Commission proposal

* Further talks required if no deal Wednesday

By Barbara Lewis

BRUSSELS, Oct 28 (Reuters) - European nations are sharply divided over plans to tighten EU car-testing rules, despite the Volkswagen emissions scandal, national position papers seen by Reuters show ahead of a closed-door meeting to debate the issue.

The European Commission and European Parliament have sought to pressure the 28 EU governments to reach a swift deal on tougher regulations to close the gap between the real and theoretical performance of new cars.

But EU officials, speaking on condition of anonymity, said a meeting of technical experts on Wednesday could fail to agree on a draft law, as member states, including Britain and Germany, call for more leeway, while Denmark was among those leading demands for a tougher regime.

The European Commission has proposed "real-world" testing would become operational from next year, but would only take full effect after a phase-in for new vehicles from 2017.

Initially nitrogen oxide (NOx) readings, primarily associated with diesel cars, could exceed an 80 milligramme/kilometre limit by 60 percent before falling to a more modest 20 percent.

Several EU member states in submissions to the Commission call for more latitude than that. At the most extreme, Italy, home to Fiat Chrysler, asked for what is known as a "conformity factor" of three, meaning cars could produce three times agreed limits on NOx.

Without giving precise numbers, the German government said "thoroughness must take precedence over speed" and "the diesel engine should be preserved as a powertrain option on the mass market," while any conformity factor needed to be pragmatic.

Taking a similar line, Britain urged further analysis, saying: "It is not yet possible to arrive at a robust conclusion."

Spain, a major manufacturing centre for diesel cars, said severe new requirements would have negative consequences, including damage to the Spanish economy and making it harder to achieve goals to reduce CO2 emissions. Diesel cars, while high in NOx, are relatively low in carbon pollution.

By contrast a Danish paper said it was important real-world tests re-establish confidence of consumers and citizens. It backed the Commission proposal.

Europe's largest carmaker Volkswagen is battling the biggest business crisis in its 78-year history after admitting in September it installed software in diesel vehicles to deceive U.S. regulators about their toxic emissions.

In Europe, a chronic failure to close the gap between NOx emissions in real driving conditions compared with tests, confirmed by European Commission research, has drawn unfavourable comparisons with Washington's track record in policing business. (Editing by David Holmes)