UPDATE 1-E.ON Ruhrgas settles gas dispute with EU

* Import volumes will be partially sold directly

* Commission abandons demands for better handling

(Adds details, background, EU comment)

FRANKFURT, Dec 17 (Reuters) - German gas market leader E.ON (EONGn.DE) Ruhrgas said on Thursday it will sell gas it receives under long-term import contracts directly into the market to settle a row with the EU Commission over a lack of competition.

"E.ON Ruhrgas is giving important impulses for more competition in the European gas market," it said in a statement.

"The Commission will give up its investigation of capacity management and long-term import gas bookings at E.ON Ruhrgas after a market test," it said.

Under the deal, the company will reduce the long-term bookings it makes at its transport subsidiary E.ON Gastransport (EGT) in two steps to 54 percent of the total long-term import capacity, it said.

EGT will instead market the capacities to interested transport customers in a market-based process.

The EU said in a statement: "E.ON proposes to commit to a significant, structural reduction of its long-term gas capacity reservations which prevent access of competitors to infrastructure needed to supply gas to customers within E.ON's network."

It is understood that if the Commission accepts the proposals after the market test, it will then end its investigation. EON will not be fined nor will it be found liable for any wrongdoing. The commitments will be legally binding.

The E.ON group has had to offer to sell its high voltage power grid in Germany to settle a probe by Brussels into the power of former energy monopolies, which the EU maintains still dominate the value chain from import and production through to the end customer.

In the gas market, incumbents used to block-book key entry points and pipelines, thus cutting off new market entrants.

The EU Commission also has criticised a blocked gas storage market and big utilities' shares in local utility groups.

E.ON Ruhrgas said the E.ON group had recently sold Thuega, a utility network, and intensified free gas trading activities in order to stimulate a more competitive marketplace. (Reporting by Vera Eckert; additional reporting by Yun Chee Foo; editing by Sue Thomas)