* Stoltenberg sees need for NATO and EU to work "hand-in-hand"
* EU governments have limited cooperation between armed forces
By Robin Emmott
BRUSSELS, Nov 16 (Reuters) - NATO and the European Union must work closely to prevent more attacks like those in Paris, the head of the Western military alliance said on Monday, underscoring the risks of unconventional warfare such as cyber attacks and radicalism.
European officials are struggling to provide quick answers on how to counter the threat from Islamic State and other militant groups at a time of falling defence budgets, the lack of a common EU security policy and an overlap with NATO.
"We will redouble our efforts and work even more closely ... to counter the rise of extremism, which can inspire such horrific attacks here at home," said NATO Secretary-General Jens Stoltenberg.
Speaking alongside EU foreign policy chief Federica Mogherini, Stoltenberg said NATO and the EU could no longer afford to develop parallel policies towards similar ends. They should work together "hand-in-hand".
"When the stakes are so high, and the needs are increasing, can NATO and the EU continue as we are?," Stoltenberg asked a gathering of European defence officials.
While the North Atlantic Treaty Organization shares 22 member countries with the EU and has similar goals, the two Brussels-based organisations have separate military headquarters, rapid-reaction forces and foreign missions.
But now partly as a result of the EU'S inability to stabilise its neighbourhood economically, NATO faces the same issues of failing states, war, Islamist militancy and a refugee crisis at Europe's borders.
In Brussels, Germany's foreign minister on Monday played down any expectation that NATO-member France might seek to activate the alliance's collective defence clause following the armed attacks in Paris on Friday night which have been claimed by Islamic State.
Frank-Walter Steinmeier stressed that France had not yet raised the issue of invoking Article 5 of the NATO treaty, which considers an attack on one member as an attack against all.
Mogherini called for a new approach to European defence, although her office is not expected to lay out a broad new EU security policy until the middle of next year.
Stoltenberg said one area for improvement was to counter "hybrid warfare", the blend of unidentified troops, propaganda and economic pressure - tactics NATO says Russia used in its 2014 annexation of Ukraine's Crimea region.
Other areas were in training armed forces on Europe's southern and eastern flanks, from the Caucasus to North Africa, as well as in developing new technology.
Europe's military research and development spending has dropped sharply since the financial crisis of 2008/2009, and European defence spending continues to decline in real terms.
"Europe needs to get its act together," said Dutch Defence Minister Jeanine Hennis-Plasscheart, bemoaning limited cooperation between Europe's armed forces.
"There is no such thing as 'the short-term national interest' anymore, the only thing that matters is a confidence and credible security strategy," Hennis-Plasscheart said.
So-called EU battlegroups of rapidly deployable forces, operational since 2007, have yet to be used. Meanwhile, the United States accounts for than 70 percent of total NATO spending, according to a Reuters analysis of NATO data. (Reporting by Robin Emmott; Editing by Richard Balmforth)