LISBON, Nov 5 (Reuters) - Portugal wants to foster

competition between makers of U.S.-made F-35s and European

advanced fighter jets in the replacement of its ageing fleet of

F-16s in order to maximise benefits, Defence Minister Nuno Melo

said on Wednesday.

His latest remarks appeared more open to a possible deal with

the U.S. than comments in March, when he suggested President

Donald Trump's unpredictable policy shifts towards NATO and

Europe could make Portugal pick a European fighter.

Trump has since reaffirmed commitment to NATO while forcing

the alliance's European members to up military spending.

Melo told a parliamentary committee the process to select

new jets was yet to kick off, and when it does, the government

will consult the Air Force and take into account "returns for

the country and its industries".

Benefits to both manufacturers and purchasing countries can

include industrial participation, technology transfers and

financing. (did Melo say that, or is that from us?)

"When there are several competitors, it means that the price

goes down," Melo said..

The European Commission is urging EU countries to identify key

defence needs and launch major pan-European projects to

strengthen deterrence against Russia, emphasising that equipment

should be sourced from within Europe wherever possible.

Melo said Portugal wants to "strengthen the European pillar

of NATO" and supports producing and buying more in Europe,

granted that the best equipment is available there, while always

looking at both sides of the Atlantic.