UPDATE 1-EADS deal shows better U.S.-Europe ties-Sarkozy

(Adds trade union reaction)

By Swaha Pattanaik

PARIS, March 1 (Reuters) - French President Nicolas Sarkozy on Saturday hailed a big contract awarded by the United States Air Force to European aerospace group EADS (EAD.PA: Quote, Profile, Research) and its U.S. partner as a sign of stronger U.S.-European relations.

EADS and Northrop Grumman Corp (NOC.N: Quote, Profile, Research) landed the $35 billion U.S. Air Force refuelling plane deal on Friday in the face of a rival bid by Boeing (BA.N: Quote, Profile, Research), prompting Sarkozy to call it a success for Europe.

"It also marks an important advance in strengthening relations between the United States and Europe which, spurred on by the (French) president, owe a lot to the re-establishment of a confident dialogue between Paris and Washington," Sarkozy's office said in a statement.

EADS chief Louis Gallois also suggested that warmer political relations between the two countries might have helped.

"I pay tribute to the fairness of the U.S. administration... I think the new climate between France and the United States had something to do with it," he told France's TF1 television.

Franco-U.S. relations hit a low point when Sarkozy's predecessor Jacques Chirac opposed the 2003 U.S.-led invasion of Iraq, prompting indignant Americans to boycott products such as French cheese and rename French fries as "freedom fries".

But relations have warmed since Sarkozy's election last May, with the French leader winning U.S. praise for taking a stronger stand against Iran.