The trustee liquidating bankrupt trading firm MF Global Inc , said on Friday that he disputed the classification under British law of $600 (384.25 pounds)-$700 million in U.S. commodities claimant funds.

In a statement, the trustee, James Giddens, said the funds purportedly held as segregated assets for U.S. customers dealing in foreign futures, should be returned to those customers.

While we have made significant progress in identifying and distributing customer property held by U.S. depositories, the UK administrators' position will significantly affect, in the near term, my ability to return a substantial amount to U.S. customers dealing in foreign futures, Giddens said. We will actively and expeditiously pursue the resolution of this issue.

Most MF Global customers have already been paid back more than 70 percent of the value of their accounts.

There is still a huge chunk of segregated customer funds missing, which Giddens and regulators probing MF Global estimate could be as much as $1.2 billion.

(Writing by Alden Bentley; editing by Andrea Evans)