Trade judges on Wednesday partially overturned a ruling that had accused EU states of giving Airbus illegal subsidies, but said the aircraft maker did receive billions of dollars of unfair aid that harmed Boeing.

Upholding an European appeal, World Trade Organization judges agreed state loans to help Airbus develop the world's largest jetliner, the A380, had not broken a ban on export subsidies, the most severe category of market-distorting aid.

However judges upheld U.S. complaints that Europe's aircraft giant had received around $18 billion of a softer category of subsidies that still unfairly injured competitor Boeing.

The judges gave the European Union six months to withdraw those subsidies or eliminate their effects.

Both the United States and the European Union claimed victory after the WTO issued its 645-page report on what has become the world's costliest trade dispute.

But the two trade superpowers quickly clashed on what the report would mean for the next generation of Airbus aircraft, the Airbus A350 which is being developed to compete with Boeing's 787 Dreamliner.

The United States wants the countries that founded Airbus 40 years ago -- Britain, France, Germany and Spain -- to refrain from giving further development loans.

Airbus Chief Executive Tom Enders said Airbus could and would continue to use state partnerships to build its planes.

The ruling will be scrutinized by countries bidding to enter the passenger jet market to compete with Airbus and Boeing, including China, Russia, Brazil, Canada and Japan.

The case is running alongside a counter-suit filed by the EU against alleged U.S. subsidies to Boeing.

In March, a separate WTO panel criticized around $5 billion of U.S. payments to Boeing, including some already covered by an earlier trade dispute.

Both sides have appealed that verdict, which the United States says is dwarfed by aid to Airbus.

(Reporting by Barbara Lewis, Juliane von Reppert-Bismarck, Doug Palmer; writing by Tim Hepher; editing by Andrew Heavens)

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