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".