Feb 17 (Reuters) - European Union governments on Thursday approved a proposal to end investigations into claims of illegal trade practices in China's exports of wireless modems, despite initial findings of Chinese subsidies, EU sources said.

In a discussion with EU officials on Thursday, government representatives endorsed ending a dual probe, started last year by the EU's executive Commission, into whether Chinese exporters receive illegal state aid and dump wireless modems, also known as dongles, on the EU market at illegally low prices.

Belgian wireless modem maker Option (OPIN.BR) late last year had withdrawn its complaint to the EU that Chinese rivals such as Huawei [HWT.UL] and ZTE (000063.SZ) benefit from illegal support after it entered a cooperation agreement with Huawei.

Under EU law the Commission could have pursued the investigation even after Option's withdrawal, because its preliminary findings had suggested evidence of significant state aid for Chinese telecoms operators. [ID:nLDE7131VM]
"People saw the reality of the situation, that there is no reason to continue the investigations," a person present at Thursday's talks told Reuters.

The investigations, which could have led to punitive import duties on Chinese dongles, were being watched by EU firms worried that China is encroaching on the high-tech telecoms and mobile network sectors but unwilling to step forward for fear of jeopardising operations or contracts in China.