BRUSSELS, July 23, 2008 (AFP) - The European Commission blocked German express delivery company DHL on Wednesday from receiving state guarantees worth up to 500 million euros (790 million dollars) to set up its European hub at Leipzig Halle airport.

The commission ruled that the guarantees from the eastern German state of Saxony failed to meet EU state aid rules as they 'allowed DHL to hedge business risks on terms which a private investor would not have accepted.'

However, Europe's top competition watchdog found that 350 million euros in public investment for a new runway at Leipzig Halle in eastern Germany respected EU rules.

The Commission, which polices state aid in the EU to ensure competition is not distorted, opened a probe in November 2006 after German authorities informed EU regulators of plans to help build and operate the new runway at the airport where DHL wants to set up its European express parcel hub.

In Germany, Deutsche Post, which owns DHL, said the ruling 'would not have negative consequences for the platform.

'Political and judicial decisions have already ensured the security of our investments' in Leipzig, a statement said.

The Commissions's ruling 'does not change the DHL long-term decision to install its European platform in Leipzig.'

The hub was inaugurated in June and was expected to create around 3,500 jobs in a part of eastern Germany that remains economically depressed.