UPDATE 1-EU to find Intel anti-competitive - sources

(Adds paragraph 6 on order to end rebates)

* EU to say Intel paid PC firms to delay rival products-sources * To say Intel gave retailers inducement to exclude AMD-sources * EU sees acts as "naked restrictions" on competition-sources

By David Lawsky

AMSTERDAM, May 10 (Reuters) - EU antitrust regulators are expected to say this week that Intel Corp (INTC.O) illegally paid computer makers to postpone or cancel the launch of products containing chips made by its main rival, sources familiar with the case said on Sunday.

The European Commission is set to decide on Wednesday to fine the world's largest chipmaker and order changes to its business practices for what the EU executive sees as "naked restrictions" to competition, the sources said.

There was no indication of how big a fine might be levied. The largest fine levied by the EC for an abuse of market dominance was the 497 million euros ($655 million) demanded from Microsoft (MSFT.O) on March 24, 2004.

The sources said the Brussels-based Commission is expected to rule that Intel committed two violations in which the firm abused its dominance of the market for central processing units, the chips at the heart of the world's 1 billion personal computers.

The EU executive will say Intel gave rebates to computer makers to restrict or eliminate the use of chips made by its rival, Advanced Micro Devices (AMD.N), and provided other inducements to retailers to sell only machines with Intel CPUs.

In its ruling the Commission will order Intel to end by a specific date those rebates which it deems to be illegal, the sources said.