FARNBOROUGH, England (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.