(Fixes Austrian party name to FPO)
* Eurosceptics dropped joint campaign launch, run separately
* Dutch and Austrian leaders caused offence with race remarks
* UKIP's Farage trips on own words after shunning Le Pen, Wilders
* Eurosceptics still plan joint group to secure funds, staff, rights
By Paul Taylor
PARIS, May 20 (Reuters) - It was meant to be the campaign launch of a new Eurosceptic alliance, but the planned April 16 meeting starring France's Marine Le Pen and Dutchman Geert Wilders in Strasbourg, home of the European Parliament, never took place.
Five months after the two far right leaders, who oppose the euro currency and European Union membership, announced in The Hague they were teaming up to create an influential group in the assembly, they no longer wanted to be seen together in public.
At least not before polling day.
The scrapping of the jamboree highlighted a dilemma facing Europe's insurgent populists, forecast to make spectacular gains in this week's 28-nation election to the EU legislature: they need each other to secure a louder voice in the chamber, but each risks being tainted by association with the other.
Since the nationalists are campaigning to halt and reverse European integration and close borders to foreigners, there may be little electoral advantage in appearing together, and more to be gained by working their own national sandpits.
But once the votes are counted on Sunday night, most will have an interest in swallowing any distaste, surmounting their leaders' egos and teaming up to secure more parliamentary speaking time, staff, EU funding and committee seats.
Behind the scenes, they are working hard on forming such a group, said Franz Obermayr, an MEP from Austria's Freedom Party, another partner in the emerging Eurosceptic Internationale.
Whether it will last, given policy differences and rival personalities, remains to be seen.
The populists, sometimes described as a European equivalent of the U.S. "Tea Party", were shut out of television debates for the EU election ostensibly because they did not nominate a joint candidate for president of the executive European Commission.
Le Pen's National Front (FN) cited strategy reasons for scrapping the Strasbourg meeting, denying it had anything to do with the Dutch Freedom Party leader's comment in March that he would make sure the Netherlands had "fewer Moroccans".
The Austrian party got into trouble at the same time when one of its two top candidates, Andreas Moelzer, said the EU was in danger of becoming a "conglomerate of negroes". He was made to step down.
Wilders' PVV declined comment on the reasons for dropping what Dutch magazine Vrij Nederland said was planned as a joint campaign launch. Thirteen out of 100 elected PVV officials in national and local assemblies resigned over his comments.
UK Independence Party leader Nigel Farage, who co-led the sceptical Europe of Freedom and Democracy group in the outgoing EU parliament, has refused to team up with either Le Pen or Wilders, suggesting both parties are too extreme for him.
So too have the anti-bailout True Finns, whose leader Timo Soini is trying to moderate his party's nationalist image ahead of a general election next year.
Some hard right groups likely to win seats - such as Greece's Golden Dawn and Hungary's Jobbik - are regarded as so extreme that Wilders and Le Pen want nothing to do with them.
The German anti-euro party founded last year, Alternative for Germany, regards all the populist groups, including UKIP, as too radical to be respectable partners and says it would prefer to ally with Britain's relatively Eurosceptical governing Conservative party.
In an interview with Reuters in February, Farage said the worst thing that could happen to UKIP, which campaigns for Britain to leave the EU, would be if it were associated with racism. While Le Pen had worked to detoxify her party, he said, there was still a whiff of anti-Semitism. Likewise, Wilders' virulent attacks on Islam were too much for Farage.
Le Pen and Wilders shrug off his criticism as tactical, saying they expect UKIP to join their group after the vote if it can't find enough allies to sustain its own. Meanwhile, they have been picking off Farage's previous partners, such as Italy's xenophobic Northern League.
Farage himself has since drawn condemnation for voicing discomfort at hearing foreign languages spoken on British trains and at the thought of having Romanian neighbours. Noting that Farage's wife is German and his daughters' first language is German, a radio interviewer flummoxed him by asking if he objected to them speaking German.
Yet opinion polls suggest such incidents do not necessarily do populist politicians lasting harm because they express some voters' gut feelings. Support for Wilders fell briefly after his anti-Moroccan outburst but has bounced back.
The Austrian FPO is back in the lead over the mainstream centre-right and Socialists in national opinion polls, although not for the European election.
A BVA poll for Le Parisien daily found that while 60 percent of French voters think Le Pen is racist, 63 percent say she is "courageous". Those numbers imply a substantial overlap.
A strong supporter of Israel, Wilders was long reluctant to have anything to do with the National Front because Le Pen's father, Jean-Marie, who founded the FN in 1972, had convictions for anti-Semitic hate speech and justifying Nazi war crimes.
After Marine Le Pen took over in 2011 and set about renovating the party's image, expelling skinheads and focusing her anti-immigration discourse on public displays of Islam, the Dutchman decided she was respectable.
She in turn played down Wilders' comparison of the Koran with Adolf Hitler's "Mein Kampf" and said his comment on getting rid of Moroccans was "spoken in the excitement of an election evening" and should not stir "artificial controversy".
Jean-Marie Le Pen, 84, remains honorary president of the FN and will again get a seat in the European Parliament.
Marine Le Pen says she is determined to form a parliamentary group of Eurosceptics from France, the Netherlands, Austria, Belgium, Italy, Sweden, Slovakia and Lithuania to win the speaking time and financial benefits reserved for alliances of at least 25 members from seven or more EU countries.
"As non-affiliated MEPs, we are second-rate members. We don't have the resources available to other members who belong to a group," she told RTL radio.
"But I'm going to settle that problem because I'm going to form a group. At least I hope so... Because I want to block any advance of the European Union."
The parties differ on issues such as gay rights and Israel.
But the FN's European spokesman, Ludovic de Danne, said the main pillars of a Eurosceptic group platform were largely agreed: opposition to a federal Europe; a shared view that the euro zone is dysfunctional; opposition to global free trade; a shared view that the EU is not doing enough on employment; shared positions against immigration and ethnic or religious communautarianism; and opposition to the EU having its own voice on diplomacy and international affairs.
Whether such a group will have the clout to block a planned U.S.-EU free trade deal, as Le Pen has vowed to do, will depend on finding allies on the far left and among otherwise pro-European groups such as the Greens and Socialists. (Additional reporting by Anthony Deutsch in Amsterdam, Mark John in Paris, Georgina Prodhan in Vienna; Writing by Paul Taylor; Editing by Giles Elgood)