* France says status quo favours Syrian government
* Germany fears lifting embargo would fuel violence
* U.N.'s Brahimi warns Syria could end up worse than Somalia
By Adrian Croft and Justyna Pawlak
BRUSSELS, March 11 (Reuters) - France urged the European Union to look again at lifting an arms embargo on Syria to help rebels fighting President Bashar al-Assad, putting it at odds with Germany which said such a step could spread conflict in the region.
Highlighting the different approaches of two of the European Union's heavyweights, French Foreign Minister Laurent Fabius on Monday said lifting the arms embargo would help level the playing field in the two-year-old conflict in which 70,000 people have died.
But his German counterpart, Guido Westerwelle, said after a meeting of EU foreign ministers in Brussels that such a move could lead to a proliferation of weapons in the region and spark a proxy war.
France reopened the sensitive issue only days after EU governments had agreed a hard-fought compromise on a limited easing of the arms embargo to help Assad's opponents.
"The question of lifting the arms embargo arises increasingly because there is a clear imbalance between Bashar al-Assad who is supplied by powerful weapons from Iran and Russia and the (opposition) National Coalition which doesn't have these weapons," Fabius said.
"I think this question of the embargo, which was already raised several weeks ago here, will have to be posed again very quickly because we cannot accept such an imbalance which ends in the massacre of an entire population," he told reporters.
Saudi Arabia and Qatar are widely believed to be providing weapons to the rebels. The United States says it does not wish to send arms for fear they may find their way to Islamist hardliners who might then use them against Western targets.
Within the EU, Britain, supported by France, has been pushing for easing the arms embargo to help Syrian rebels. But many other EU states have reservations.
UK INCREASES AID
After weeks of wrangling, the EU amended the arms embargo last month to permit the supply of armoured vehicles, non-lethal military equipment and technical aid to the Syrian opposition, provided they were intended to protect civilians.
Britain moved quickly to expand the scope of the aid it gives the Syrian opposition, pledging to supply armoured vehicles and chemical weapons testing kits.
Westerwelle and EU foreign policy chief Catherine Ashton put the emphasis on helping rebuild rebel-held areas of Syria.
"I am convinced that it is necessary we do more for the reconstruction in the liberated zones," Westerwelle said.
"So the economic and financial embargo, which at the moment hits the whole country, should be handled in a more flexible way and maybe changed so that we can deliver goods for infrastructure, medical assistance, electricity, water," he said.
Ashton said the EU was looking at ways to work with the opposition to restore basic services, such as medical supplies, water purification, power generation and some administrative services.
EU ministers discussed the Syria crisis with U.N. mediator Lakhdar Brahimi, who warned that Syria could end up worse than violence-torn Somalia unless a political settlement is found.
"The real choice in Syria is between a peaceful, political, consensual agreement, and a situation which resembles and is greater than the situation which Somalia knew in the last few years," he told reporters. (Additional reporting by Luke Baker, Robert-Jan Bartunek and Dominic Evans; Editing by Erica Billingham)