Reuters - May 5 A preliminary deal signed by Buyogues last year to build and run a new terminal at Tehran's Khomeini airport has been cancelled, a spokesman for the French construction group said on Friday.

The memorandum of understanding awarding Bouygues the contract was agreed in January 2016.

The project was hindered by the company's struggle to get financial backing from international banks, which are still wary of U.S. sanctions over their activities in Iran, online newspaper La Lettre de l'Expansion earlier reported.

"The MoU is now void but there are still ongoing discussions with Iranian authorities," the Bouygues spokesman said.

Aeroports de Paris, initially Bouygues' partner for the Tehran airport terminal development, said in February it would no longer take part in the project.

France's Vinci also signed preliminary deals last January to build the extension of Iran's Mashhad and Isfahan airports, the country's second and fifth biggest hubs, and negotiations with Iranian authorities on those are still ongoing.

Iran remains a major potential market for construction firms. (Reporting by Gilles Guillaume; writing by Sarah White. Editing by Jane Merriman)