* EU Commission, not ECB, is Merkel's priority- report
* Bundesbank and German government decline to comment
* Commission job covers trade issue of concern to Germany
* Bundesbank chief Weidmann a tough sell for ECB presidency
By Paul Carrel and Balazs Koranyi
BERLIN/FRANKFURT, Aug 23 (Reuters) - Germany's Jens Weidmann is seeing his prospects of becoming European Central Bank president fade, amid signs that trade issues handled in Brussels are eclipsing Berlin's concerns about securing its man to steer monetary policy.
Chancellor Angela Merkel is focusing on winning the European Commission presidency for a German rather than backing Bundesbank chief Weidmann to succeed Mario Draghi, German business daily Handelsblatt reported on Wednesday.
She might have her work cut out either way.
Both jobs come up next year. Weidmann has a strong central banking profile but has antagonised much of southern Europe. Securing the Commission post would also not be easy, with many EU states wary of a German taking charge in Brussels.
The Bundesbank and a German government spokesman declined to comment on the Handelsblatt report, and sources close to Merkel have told Reuters it was too soon to determine Germany's priorities for the European posts.
However, the European Commission role is crucial in leading the EU's trade policy, a critical area for Germany.
Its export-orientated economy is starting to feel the impact of increasing U.S. protectionism, even if current Commission head Jean-Claude Juncker last month achieved some success in scaling back U.S. President Donald Trump's trade threats.
By contrast, the ECB has already indicated it wants to exit the unprecedented package of monetary stimulus deployed by Draghi - and resisted by Weidmann - to fight the euro zone crisis.
The next ECB president will simply manage that exit, guided by economic data, and may not get the opportunity to employ more dynamic policies.
"It would make more sense to have a German as the head of the Commission given Merkel's focus on issues like immigration, security, infrastructure and EU budget," Frederik Ducrozet, an economist at wealth manager Pictet in Geneva.
Dirk Schumacher, an economist at French investment bank Natixis in Frankfurt, said that, in the more political commission job, "there is more room for manoeuvre, especially if you have an active person."
"The price for Weidmann at the ECB was high ... so I'm not surprised there has been a shift of focus in Berlin," he added.
But even if she trains her sights fully on the Commission post, Merkel may struggle to secure it for Germany as some other states are sure to have reservations about the bloc's biggest country taking the influential role.
The outcome of the jobs merry-go-round will also likely be influenced by European Parliament elections in May, and which group French President Emmanuel Macron's En Marche movement joins.
The two largest groups in the Parliament usually decide between them who gets the top Commission job. But they risk not winning a combined majority this time, meaning at least one other group may have to be involved in any deal.
Weidmann, as the most hawkish member of the ECB's policymaking Governing Council, is deeply unpopular in those parts of the euro zone hit hardest by the crisis that Draghi sought to fight with the German resisting him.
Speaking in Berlin on Thursday, Weidmann made no reference to the ECB succession but kept up his push for the central bank to unwind its stimulus.
His approach to monetary policy is shaped by 'Ordnungspolitik'- the Bundesbank dogma in which the role of a totally independent central bank is solely to ensure stable prices, not to promote economic growth and employment or help governments with fiscal problems.
This put him at odds with Draghi, who - at the height of the euro zone crisis - vowed to do "whatever it takes" to save the single currency before embarking on increasingly ambitious policy steps, culminating in purchases of government bonds.
Weidmann's predecessor as Bundesbank chief, Axel Weber, also grew frustrated with ECB policy at the outset of the euro zone crisis and bowed out of his race with Draghi for the top job, instead becoming UBS chairman.
If Merkel gives up on the ECB job, she is likely to have three options: opt for a candidate who toes the German policy line, trade the position with France in exchange for their support elsewhere or opt for a candidate from a small country.
Highly qualified candidates who may be considered German proxies could include Dutch central bank chief Klaas Knot or Estonia's Ardo Hansson, both among the more conservative members of the Governing Council.
Although policy is set collectively, Governing Councils have always backed their president to maintain unity. Most decisions are taken with a relative consensus, so Weidmann's persistent opposition ruffled feathers.
While it is not mandatory to pick one of the 19 euro zone governors to succeed Draghi, EU leaders have always picked an ECB chief from among them.
Additional reporting by Michael Nienaber in Berlin and Francesco Canepa in Frankfurt; editing by John Stonestreet