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President of the German Federal Intelligence Agency (BND) Gerhard Schindler gestures during a visit of the Reuters office in Berlin, March 5, 2014. REUTERS/Fabrizio Bensch/File Photo

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By Noah Barkin and Thorsten Severin

BERLIN (Reuters) - The head of Germany's BND foreign intelligence agency will be removed from his post two years early, government sources told Reuters on Tuesday, a surprise move that comes at a time when Germany faces a growing threat from Islamic State militants.

It was not immediately clear why Gerhard Schindler, 63, who has led Germany's version of the U.S. Central Intelligence Agency since 2012, was being removed years before he reaches retirement age.

Schindler came under pressure a year ago when it emerged that the BND had gone against German interests and spied on European partners at the request of the U.S. National Security Agency (NSA).

But he appeared to have weathered that storm after promising to centralise control over BND field offices that he admitted had taken on a "life of their own".

Surveillance is a sensitive issue in Germany because of the extensive snooping by the Stasi secret police in communist East Germany and by the Gestapo in the Nazi era.

Neither the German government nor the BND were immediately available to comment on the matter. But Chancellor Angela Merkel's chief of staff Peter Altmaier earlier invited reporters to a briefing on Wednesday without specifying the purpose of the gathering.

Sources told Reuters that Schindler would be replaced by Bruno Kahl, a finance ministry official who is a close ally of Finance Minister Wolfgang Schaeuble.

German media reports said government officials doubted that Schindler could make the changes to the BND that Berlin felt were necessary in the two years that remained before his retirement.

OBAMA WARNING

The move comes after Islamic State militant attacks in Brussels and Paris exposed holes in how European intelligence agencies cooperate and share information with each other.

In a speech on Monday in the northern German city of Hanover, U.S. President Barack Obama acknowledged concerns about privacy linked to German history, but also cautioned against allowing them to impinge upon security.

"If we truly value our liberty, then we have to take the steps that are necessary to share information and intelligence within Europe, as well as between the United States and Europe, to stop terrorists from travelling and crossing borders and killing innocent people," he said.

Reports last year that the BND had helped the NSA spy on European officials and firms strained German-U.S. relations and created divisions within Merkel's government.

Revelations several years ago by former U.S. intelligence contractor Edward Snowden about wide-ranging NSA espionage in Germany, including the bugging of Merkel's mobile phone, caused public outrage.

Germany has not suffered a major attack by Islamist militants on its soil, but hundreds of its citizens have travelled to Syria in recent years to join the group and some members of the network behind the Paris and Brussels attacks travelled through Germany.

Merkel's government agreed last year to begin supplying weapons and logistical support to local forces fighting Islamic State in Syria and Iraq, and Germany is now seen as a primary target of the group, also known as ISIS or ISIL.

Last month, Islamic State, posted pictures online calling on German Muslims to carry out Brussels-style attacks in Germany. The group singled out Merkel's offices and the Cologne-Bonn airport as targets, the SITE intelligence group reported.

One of the disseminated images features a militant in combat fatigues standing in a field and gazing at Cologne-Bonn airport with a caption reading: "What your brothers in Belgium were able to do, you can do too."

Another shows the German chancellery building in Berlin on fire with an Islamic State fighter and a tank standing outside the structure. The headline reads: "Germany is a battlefield."

Earlier this month, the BND celebrated its 60th anniversary. Long based in Pullach in southern Germany, it is due to move into a brand new headquarters in central Berlin next year.

(Reporting by Noah Barkin, Thorsten Severin, Andreas Rinke and Sabine Siebold; editing by Ralph Boulton and Gareth Jones)

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