* EU hopes for deal to ease concerns of Irish voters
* Britain seeking clarification on wording - diplomat
* EU leaders aim to endorse Barroso for second term
* Leaders want fast progress on financial regulation reform
(Adds EU diplomats on progress of negotiations)
By Timothy Heritage
BRUSSELS, June 16 (Reuters) - The European Union hoped to complete a deal on Tuesday to offer Ireland legal guarantees on national sovereignty that would increase the chances of Irish voters backing a treaty reforming EU decision making.
Ireland is confident a deal will be reached in time for EU leaders to approve it at a two-day summit starting on Thursday. The Irish government would then be likely to hold a second referendum on the Lisbon reform treaty in September or October.
The leaders will also back Jose Manuel Barroso for a new term as president of the executive European Commission at the summit, discuss financial regulatory reforms, step up the fight against unemployment and plot strategy for U.N. climate talks.
"There is a broad consensus on the text. The only country still wavering is Britain," said an EU diplomat of negotiations in Brussels on a draft of the proposed guarantees.
After Irish voters rejected the treaty in a referendum last June, Dublin is seeking assurance on issues including taxation, abortion and military neutrality, and wants to continue to have a representative on the European Commission.
Britain had said the assurances on national sovereignty in military matters should be worded to make clear it applied to all EU states, not just Ireland, a second EU diplomat said.
While all accepted the final text would be legally binding, Britain also wanted more debate on which legal instrument the EU should choose to express the guarantees, the diplomat added.
Ireland's referendum is vital because reforms intended to streamline decision making in the EU and give it more weight on the world stage can go into force only if all 27 member states approve the Lisbon treaty.
"Depending on a successful conclusion to this week, it would be unreasonable for Ireland ... to in any way block the reforms necessary to make the EU effective on the world stage," Irish Foreign Minister Micheal Martin said after talks on Monday.
Opinion polls suggest the treaty now has the support of a majority of Irish voters, many of whom look to Europe as a shield in the global financial crisis.
BARROSO FACES OBSTACLES
Barroso had hoped the summit would give him a legally binding endorsement for a second five-year term but diplomats said he may receive only a political statement saying he has the EU leaders' confidence.
Some states want to delay his formal nomination until the Lisbon treaty goes into force because the structure of the new Commission and the ratification process for the president will change under it. Others argue that would leave a power vacuum.
Barroso, 53, a conservative former prime minister of Portugal, has headed the EU's executive since 2004. His allies argue he would offer stability at a time of economic crisis.
Daniel Cohn-Bendit, a Green deputy at the European Parliament, has launched an anti-Barroso campaign, arguing Barroso has promoted free markets at the expense of social concerns, but so far no one else is standing for the job.
The Commission has far-reaching regulatory powers and proposes much of the EU's legislation. The president decides its policy priorities and chooses the other Commission members.
One of those priorities will be implementing new financial regulations to prevent another global economic crisis.
The EU leaders are expected to demand quick progress on this at the summit, particularly on regulation of alternative investment funds and improved capital requirements for banks.
They are also set to approve the creation of two new bodies to assess potential threats to financial stability and protect small financial firms and consumers, and call for the new regulatory framework to be in place in 2010.
The action coincides with U.S. President Barack Obama's plan to outline regulatory reforms on Wednesday, targeting critical weaknesses in the U.S. financial system such as thin bank capital cushions and eroded lending standards. (Additional reporting by Mark John and David Brunnstrom) (timothy.heritage@thomsonreuters.com; +32 2 287 6801; Reuters Messaging: timothy.heritage.reuters.com@reuters.net))