UPDATE 4-British Energy bid war hopes wither

(Adds no Iberdrola bid, EDF offer, updates shares)

By Mathieu Robbins and John Bowker

LONDON, May 9 (Reuters) - Hopes of a bidding war for nuclear power generator British Energy Plc (BGY.L: Quote, Profile, Research) faded on Friday as sources familiar with the matter said Germany's RWE (RWEG.DE: Quote, Profile, Research) would not make a bid by the day's deadline, knocking its shares.

Spain's Iberdrola (IBE.MC: Quote, Profile, Research) also did not make an offer for British Energy on Friday, but did not rule out a future offer, an industry source said.

When the UK government put its 35 percent stake in the firm up for sale, many of Europe's largest utilities showed interest. But as the deadline loomed, some fell away and none seemed set to offer more than the shares have recently traded at.

British Energy shares ended down 2 percent at 701 pence, up from a low of 685p, valuing the government's stake at about 3.5 billion pounds ($6.83 billion).

German utility RWE (RWEG.DE: Quote, Profile, Research), which was set to bid less than 700 pence a share, would not make an offer on Friday after Swedish partner Vattenfall pulled out of the auction having faced pressure from the its owner, the Swedish government, according to sources familiar with the matter.

RWE could get involved at a later date, however, either alone or with a different partner. "RWE are not necessarily walking away," one of the sources said.

"Iberdrola has not submitted an offer for British Energy, but no final decision has been taken," an industry source said, meanwhile, adding that the firm was still interested in taking part in Britain's new nuclear building programme.