By Christopher Borowski

AMSTERDAM (Reuters) - Remnants of the once-mighty data network of bankrupt KPNQwest looked set for final shutdown with trustees unlikely to seal the sale of a key chunk to its Dutch parent KPN KPN.AS by a Friday night deadline.

KPNQwest KQIP.AS trustees have managed to keep a key part of what used to be Europe's largest data network running for over six weeks since the firm went bankrupt, but have sold only small parts after legal uncertainties and unpaid bills to suppliers scared off most bidders.

KPN on Thursday threatened to halt funding as of 2100 GMT on Friday. It complained that KPNQwest's administrators had not responded to its bid for parts of the network.

One of the administrators told Reuters on Friday evening that no deal had been sealed with KPN. "We are still in discussions," said Jan van Apeldoorn, declining to give further details.

Without funding the trustees would have little choice but to pull the plug on a network that once carried a large chunk of Europe's Internet traffic but is now a shadow of its former self after most clients switched to other providers.

"The Dutch trustees are unlikely to give in to KPN's arm-twisting, especially since other local trustees have a significant voice in the asset disposal now," said a source close to the talks, who asked not to be named.

The source estimated KPN's bid at some 15 million euros.

KPN spokesman Marinus Potman said with no deal expected by Friday night, KPN planned to stop funding, but that would not mean the immediate shutdown of KPNQwest's network.

Workers in charge of the network had been paid until next Friday and would probably start gradually shutting down the network next week if no more funds were available.

Apeldoorn said he was skeptical that KPN would follow through on its threat. If funds were cut off, it was hard to say when the network would go down, but any shutdown would be orderly, he said.

The assets of KPNQwest, whose market capitalization has plunged to four million euros from 42 billion euros two years ago, are under some form of bankruptcy procedures in nearly a dozen countries, complicating any talks.

KPN, which is interested in parts of KPNQwest's network in Western Europe and an undersea connection to Britain, claims its offer is the only concrete and competitive one for the section.

TELIA PUSHING FOR AUCTION?

Dutch daily Het Financieele Dagblad reported on Friday that the Nordic region's top operator, Telia TLIA.ST ,is pushing for an open auction of KPNQwest assets after it snapped up some parts of the network in France, Germany and Italy.

A spokesman for Telia's network unit declined to comment.

KPNQwest's liquidators and lender banks had hoped to sell the network more or less in one piece to maximise the proceeds. but their hopes were dashed when the main bidder, U.S. telecoms group AT&T T.N , walked away at the end of last month.

The banks -- including Citigroup C.N , Deutsche Bank DBKGn.DE and Dutch ABN AMRO AAH.AS -- have been frustrated by the liquidators' inability to attract higher offers, which makes it unlikely they will recover much of the remaining 220 million euros owed by KPNQwest.

Liquidators and lenders clashed in court after the banks withheld cash collected from customers to keep the network running last month. Parts of the network have been kept going through funding from a group of telecoms firms led by KPN.

The lenders, as well as investors, fear they were misled by KPNQwest about its financial state and plan to ask for an investigation into its books and its cozy relationship with its founders and main clients, KPN and U.S. Qwest Q.N .

Both have denied any wrongdoing.

Concerns were exacerbated by this week's release of a document that showed KPNQwest's 2001 loss was actually far wider than previously announced and suggested management might have been aware of its problems weeks before informing the markets.

Euronext Amsterdam said on Friday it had launched an investigation into whether the firm had released information quickly enough to investors.

KPNQwest's former chief executive had said after liquidators stepped in that he stood by all the company's results.

A former head of the group's investor relations told Reuters this week that the draft document in question was misdated and that the loss resulted from a write-down of expected tax refunds, which took place after KPNQwest publicized its woes. (Additional reporting by Eric Onstad and Anna Peltola in Stockholm)