UPDATE 1-3 UK to sell Nokia's N95 music phone-source

* 3 UK to sell Nokia's N95 Comes with Music phone - source

LONDON, Oct 14 (Reuters) - Mobile operator 3 UK is to sell Nokia's (NOK1V.HE) N95 Comes With Music handset which offers unlimited music downloads, an industry source told Reuters on Tuesday.

Both 3 and Nokia declined to comment.

The Comes With Music service will first go on sale in Britain on Oct. 16 via a pre-paid 5310 Xpress Music phone, and the monthly contract N95 will be supported and sold by 3 from next month, said the source, who had direct knowledge of the plan.

3 is owned by Hutchison Whampoa (0013.HK).

The move to sell music as part of a phone package is a new offering from Nokia and analysts had said that it would struggle unless operators agreed to support and sell the phone with a monthly contract over their networks.

Many see the offering as a direct challenge to Apple's (AAPL.O) hugely successful music service iTunes. (Reporting by Kate Holton and Tarmo Virki; Editing by David Cowell)