Linde-Praxair merger seen more likely as labour opposition wavers

* One labour leader may not vote with other five - sources

* Dresden works council chief frets over possible job losses

* Chairman Reitzle could be spared need to use casting vote (Releads with uncertainty over labour opposition, changes dateline)

By Georgina Prodhan and Jörn Poltz

FRANKFURT/MUNICH, May 31 (Reuters) - A crack has appeared in German labour opposition to Linde's proposed merger with U.S. peer Praxair, three people familiar with the deal told Reuters, making it likely that the $73 billion deal will be approved on Thursday.

One Linde labour representative on the supervisory board may not vote with the other five against the merger, the people said on Wednesday, meaning that the vote will probably be carried by the six shareholder representatives on the board.

The all-share merger of equals is intended to create a market leader that will overtake France's Air Liquide, in what is likely to be the last major deal in an already highly consolidated industry.

"It seems there is not complete unity at the moment," one of the people said, citing uncertainty over how Frank Sonntag, head of the works council at Linde's Dresden engineering plant, would vote on Thursday.

The other labour representatives including trade unions fiercely oppose the merger because they fear a dilution of the influence they enjoy under German law since the headquarters of the new company is set to be in another European country.

But the struggling Dresden plant whose workers Sonntag represents is vulnerable to closure if the deal does not go ahead. The framework merger agreement includes a five-year job guarantee for German workers.

Sonntag's secretary earlier said Sonntag did not want to comment on the upcoming supervisory board meeting. Later calls to his office were not returned.

Like all German companies above a certain size, Linde's board of directors has equal representation of labour and capital interests.

Imposing decisions such as a major merger without the agreement of workers is rare. Linde Chairman Wolfgang Reitzle has said repeatedly he would be reluctant - although prepared - to force it through without a consensus.

Securing one abstention from a labour representative could spare him the necessity to use his casting vote.

The proposed all-share merger of equals still also requires approval by Praxair's shareholders and boards.

German Economy Minister Brigitte Zypries earlier urged Linde not to force the deal through against the will of workers.

"The proposed merger of Linde and Praxair requires the employees to accept it because a takeover cannot work well without the complete support of the workforce," Zypries said in a statement.

She said she supported a call for mediation by Michael Vassiliadis, head of trade union IG BCE.

"The aim of all participants should be to get a broad consensus. Every day without common communication damages the company and so jobs," the minister said.

Zypries is a member of the Social Democratic Party, which has strong ties to the trade unions. Federal elections will be held in Germany this September. (Additional reporting by Gernot Heller in Berlin; Writing by Georgina Prodhan and Michelle Martin; Editing by Keith Weir and Edmund Blair)