UPDATE 1-Belgium finmin makes new bid to end hedge fund row

* New rules would tighten controls on hedge funds

* Talks among diplomats, lawmakers end in deadlock

* Private equity disclosures, asset stripping also in focus

* Reynders: Will seek agreement on Friday (Adds background, links to factbox)

By John O'Donnell

BRUSSELS, Sept 27 (Reuters) - European Union president Belgium will try to end a row over controls for hedge funds at a meeting of the bloc's ministers this week in a bid to push through a tough new regime for the secretive industry.

Belgian Finance Minister Didier Reynders, whose country holds the EU presidency for six months, said he would try to broker a deal on rules for hedge funds and private equity on Friday after diplomats failed to find agreement at talks on Monday.

"We will try to go further with the member states to reach an agreement," Reynders said. "I will see if it is possible to reach agreement around the Ecofin informal" meeting of finance ministers.

The ministers' gathering could decide on a new regime for hedge funds and private equity, putting them under the ultimate control of a new European watchdog and subjecting them to closer inspection by regulators. For details, see [ID:nLDE68Q24B]

But the law has pitted French President Nicolas Sarkozy against British leaders, delaying agreement and hindering Brussels as it tries to catch up with Washington on regulatory reform following the global financial crisis.

At the heart of the row is whether or not the EU should introduce a passport scheme or licence for foreign hedge funds to do business throughout Europe. The funds must now apply to each country individually to sell to investors there.

France and some lawmakers in the European Parliament would like to keep it that way, and sources said Belgian diplomats are pursuing a compromise that would postpone any introduction of a passport.

Small offshore centres such as Jersey could lose out under the new rules.

"We are worried about exporting EU laws without giving any reciprocal benefit such as a passport," said Martin De Forest-Brown, a representative from Jersey, home to hundreds of private equity and hedge funds.

He signalled support, however, for postponing the introduction of a passport. "There should be no sudden upset to the current market rules," he said.

New rules for private equity are also controversial, such as a bid by parliament to introduce bans on asset-stripping and more extensive information on investment strategy. (For more on how European rules will curb hedge funds, please see [ID:nLDE68Q24B]) (For more on how new EU sheriffs will police finance, please see [ID:nLDE68L1BY]) (Reporting by John O'Donnell, Editing by Leslie Adler)