FARNBOROUGH, England, July 23 (Reuters) - Rolls-Royce

is developing a smaller version of its Ultrafan engine

demonstrator aimed at exploring technology for the next

generation of narrow-body jets, CEO Tufan Erginbilgic said on

Tuesday.

"We are now progressing towards a demonstrator on what I

call small engines, ie narrow-body," Erginbilgic told reporters

at the Farnborough Airshow, adding the company was talking to

aircraft manufacturers about the technology initiative.

A year ago, Erginbilgic told reporters at the equivalent

Paris Airshow that Rolls did not rule out future partnerships in

the narrow-body market, but had a sufficient runway for growth

in its large engine business to live without it.

Tuesday's comments suggest a further step towards returning

to the busiest part of the market as planemakers sketch out

ideas for the next generation of planes in the 2030s, though

Erginbilgic stressed its wide-body engines were selling well.

Rolls-Royce was in an alliance from 1983 to 2011 with Pratt

& Whitney on engines for Airbus A320 jets. But it pulled out for

the current generation of narrow-bodies, whose sales have

soared.

Rival GE Aerospace is running wind-tunnel and other tests on

its RISE open-fan technology for future narrow-body planes,

promising fuel savings of about 20% from 2035 onwards.