* Competition agency sent report to financial regulator last year

* COMCO favours deeper probe into UBS' market power - source

* View will feed into debate about UBS after Credit Suisse rescue

ZURICH, Feb 29 (Reuters) - Switzerland's competition commission favours a deeper investigation into UBS' dominance of certain parts of the market after it rescued Credit Suisse last year, a source with knowledge of the matter said.

The competition authority, COMCO, late last year submitted its findings to market regulator FINMA in a report examining the impact of the takeover.

The contents of the report have not been previously reported. The source spoke on condition of anonymity because of the sensitivity of the matter.

Though the recommendation is not binding, COMCO's opinion could feed into the debate about the size and power of UBS, which analysts say has a dominant position in areas such as Swiss loan and debt markets.

Further scrutiny of its supremacy could complicate its decision to keep all of Credit Suisse's domestic businesses.

COMCO told Reuters it would publish its report as soon as FINMA had made a decision but declined to comment on the specific details. The report provides recommendations to promote competition, it said.

FINMA told Reuters "the review of the effects of the merger on competition is ongoing" and declined to comment on when it would reach a view.

UBS declined to comment.

The bank's shares turned lower after Reuters reported on the matter before recovering to stand 0.2% higher on the day at 1648 GMT.

The source added that ahead of the publication of the report, UBS has been considering what its options could be should FINMA support COMCO's recommendation of a deeper investigation, which the competition authority would carry out.

UBS, which bought its arch-rival last March in the biggest banking rescue since the 2008/9 financial crisis, had considered selling Credit Suisse's domestic business but ultimately decided to keep it.

COMCO's role in assessing the impact of mergers was suspended at the time as Swiss authorities used emergency laws to push the deal through. But the agency, also known as Weko, can still examine UBS' position in specific markets on competition-related concerns.

Swiss lawmakers had raised concerns the merger could reduce competition while analysts noted the combined entity would have a dominant position in parts of the Swiss loan market.

The enlarged UBS had a 45% share of the market for underwriting Swiss franc-denominated bonds in 2023, according to Dealogic data, while the combined share of UBS and Credit Suisse in franc-denominated debt capital markets has been above 50% for three of the last five years.

UBS CEO Sergio Ermotti has said there is robust competition in Swiss banking, and that his bank would be the second-largest player after cantonal lenders in most product areas.

The takeover of Credit Suisse requires regulatory approval in multiple countries. The European Commission cleared the merger of competition concerns in May. (Reporting by Oliver Hirt and Noele Illien; Editing by Tommy Reggiori Wilkes and Elisa Martinuzzi, Kirsten Donovan)