UPDATE 1-Business group sees thousands of U.S. jobs from Pacific trade deal

WASHINGTON, April 20 (Reuters) - The 12-nation Pacific trade pact would create nearly a quarter of a million U.S. jobs due to increased foreign investment in the United States, a business group estimated on Monday, in the first look at the deal's employment impact.

The Trans-Pacific Partnership (TPP), a potential legacy-defining achievement for President Barack Obama, is near completion but has run into opposition from Democrats and others who worry the deal would cost U.S. jobs.

The Organization for International Investment (OFII), a trade group that represents the U.S. operations of global companies, said TPP would create 68,000 direct jobs tied to an estimated $20 billion boost in foreign direct investment.

The trade deal, which reaches from Japan to Chile, would also create another 165,000 "indirect and induced" jobs from U.S. suppliers and other firms that employ additional workers when foreign spending in the United States increases, OFII said.

The group said California is likely to see the biggest boost in employment from TPP, followed by Texas and New York.

J. Muir Macpherson, an economist at Ernst & Young and one of the study's authors, said the TPP would create additional benefits for companies that already invest heavily in the United States.

"(So) even a small increase in FDI in the United States from the largest investors ... would have very substantial impacts," he said.

Democrats worry that another free trade deal would siphon away U.S. manufacturing jobs, as the North American Free Trade Agreement did in the 1990s.

Consumer group Public Citizen criticized OFII's report and its findings, saying other studies did not show that trade pacts like TPP actually boosted foreign investment into the United States.

"The report then translates its counterfactual hypothesis of increased foreign investment into a guesstimate of increased jobs, and then, incredibly, multiplies the spurious jobs number by three," said Ben Beachy, research director of Public Citizen's Global Trade Watch.

Public Citizen has said trade agreements over the last 20 years have led to a net loss of nearly 5 million manufacturing jobs in the United States and depressed wages.

But OFII estimated that the U.S. manufacturing sector would add 52,000 jobs due to increased investment from the Pacific deal.

The group also said that a separate U.S. trade agreement with Europe, the Transatlantic Trade and Investment Partnership, would create 334,000 direct jobs and 865,000 indirect or induced jobs tied to higher foreign direct investment in the United States. (Reporting by Anna Yukhananov; Editing by Dan Grebler and Cynthia Osterman)