ANALYSIS - Blair's star fades in EU leadership race

By Darren Ennis

BRUSSELS (Reuters) - Tony Blair may be odds-on favourite with bookmakers to become the first president of the European Council of EU leaders but his star is fast fading, according to analysts and diplomats in Brussels.

For weeks, the former British prime minister has been the front-runner for the post created in the 27-nation bloc's Lisbon Reform Treaty, which still awaits the signature of eurosceptic Czech President Vaclav Klaus to come into force.

But 56-year-old Blair's chances plummeted this week when the three Benelux countries and Austria raised objections and French President Nicolas Sarkozy, his initial sponsor, said he would have a hard time getting the job because Britain had not joined the euro single currency.

The former British Labour Party leader is still 4/6 favourite with bookmakers such as Paddy Power and Ladbrokes. German Chancellor Angela Merkel, influential leader of the EU's biggest country, has not expressed a public preference but is thought to be unenthusiastic about Blair.

Brussels insiders are talking of Dutch Prime Minister Jan Peter Balkenende, former Finnish Prime Minister Paavo Lipponen or former Irish President Mary Robinson as more consensual lower-profile possible alternatives.

Merkel is close to former Austrian Chancellor Wolfgang Schuessel, whom the French still fault for forming a coalition with far-right anti-immigration populist Joerg Haider, and to Luxembourg Prime Minister Jean-Claude Juncker, seen as too much of an old-style federalist by the British and east Europeans.

NO EURO, NO PRESIDENT