* Britain may escalate issue to ministers -EU diplomats
* Hezbollah role in Syrian war makes move urgent -Britain
A British drive to put Hezbollah's armed wing on the EU's terror list again ran into resistance on Wednesday from governments concerned it would fuel instability in the Middle East, diplomats said.
Britain's request was discussed for a second time by a special European Union group following an inconclusive meeting on June 4, but British diplomats failed to win over a number of sceptical governments.
Diplomats said the discussions were not over, but Britain may escalate the issue to a higher level, possibly to a July meeting of foreign ministers.
"There was no agreement and the understanding was the issue will be discussed further, but not in this (group)," a diplomat said.
Britain has argued that the militant Shi'ite Muslim group should face European sanctions because of evidence that it was behind a bus bombing in Bulgaria last July that killed five Israelis and their driver. Hezbollah denies any involvement.
Britain also has cited a four-year jail sentence handed down by a Cypriot court in March to a Hezbollah member accused of plotting to attack Israeli interests on the island.
The British proposal has gained urgency - and some support - in Europe in recent weeks amid signs that Hezbollah is increasingly involved in the Syrian civil war.
Diplomats say a majority of the 27 EU member states, including France and Germany, back the British proposal.
But unanimity is needed and Austria, the Czech Republic and Italy are among EU governments that have voiced reservations.
Blacklisting the group would mark a major policy shift for the European Union, which has resisted pressure from Israel and Washington to do so for years.
Several EU governments have questioned whether there is sufficient evidence to link Hezbollah to the attack in Bulgaria, according to EU diplomats.
"There are legal considerations," one EU diplomat said. "We haven't seen the evidence."
Already on the EU blacklist are groups such as Hamas, the Palestinian Islamist movement that rules the Gaza Strip, and Turkey's Kurdish militant group PKK. Their assets in Europe are frozen and they have no access to cash there, meaning they are blocked from raising money for their activities.