ANKARA, May 10 (Reuters) - Deputies from the European Parliament urged Ankara on Friday not to "misuse" Brussels' decision to include Kurdish separatists among groups it deems "terrorists" by shutting down Turkey's only legal Kurdish party.

The People's Democracy Party (HADEP) faces possible closure on charges it maintains ties to Kurdistan Workers Party (PKK) rebels, who waged a 17-year-long armed campaign for a Kurdish homeland in southeastern Turkey.

The European Union last week added the PKK to a list of banned "terrorist" organisations drawn up after the September 11 attacks on the United States.

"We really want to urge the Turkish authorities not to misuse the fact that the PKK is now on the terrorist list to crack down on legal organisations -- legal political parties of Kurdish origin," said Joost Lagendijk, who led a European Parliament delegation looking into the HADEP case.

The European Parliament in February called on Turkey, a candidate for EU membership, to drop the case at the constitutional court against HADEP, whose leaders deny any links with the PKK.

HADEP failed to cross the threshold of 10 percent of the vote needed to enter parliament in general elections in 1999, but has topped polls in the mainly Kurdish southeast and holds several mayoral offices in areas governed under emergency rule since 1987.

State prosecutors charged HADEP with backing the PKK early in 1999 when the guerrillas were still fighting Turkish security forces. More than 30,000 people have died in the conflict.

The European Union expects Ankara to improve its chequered human rights record and expand civil liberties, including granting language and cultural rights to its 12 million Kurds.

"If HADEP is closed down this would be a serious setback in relations between the European Union and Turkey," Lagendijk, a Dutch MEP, told a news conference.

He said the delegation found no evidence of a link between HADEP's leadership and the PKK but that both groups shared the "sympathy" of many in the southeast.

"It's impossible to have a sort of wall between HADEP on one side and the PKK on the other side," he said. "Although there may be individual links at the grassroots level, it's important that the leadership and the politics of HADEP are not...in any way linked to the PKK."

The European Human Rights Court ruled against Turkey last month for banning HADEP's predecessor, the People's Labour Party (HEP), closed in 1993 for threatening the state's integrity.

It said Turkey's ruling had violated Europe's human rights convention and awarded HEP officials damages.