(Adds Met Office, vulcanologist comment, background on Eyjafjallajokull)
By Simon Johnson
STOCKHOLM, Aug 29 (Reuters) - Iceland raised its alert warning level to maximum on Friday after what it called a small eruption in the Bardarbunga volcano system but said there was no sign of ash that could affect air travel in Europe.
In 2010, an ash cloud from the Eyjafjallajokull volcano, in a different region of Iceland, closed much of Europe's air space for six days.
Iceland's largest volcanic system, which cuts a 190-km (118-mile)-long and up to 25-km-(15.5-mile)-wide swathe across the North Atlantic island, has been hit by thousands of earthquakes over the last two weeks and scientists have been on high alert in case of an eruption.
Reykjavik's Meteorological Office said that just after midnight an estimated 1-km-long fissure eruption began in a lava field north of the Vatnajokull glacier, which covers part of Bardarbunga system.
The risk of an ash cloud is highest in case of a sub-glacial eruption.
"The Icelandic Met Office has raised the aviation colorcode over the eruption site to red and the Icelandic Air Traffic Control has closed down the air space from the earth up to 18,000 feet," the National Crisis Coordination Centre said in a statement.
Red is the highest alert level on a five-colour scale and indicates that an eruption is imminent or under way, with a risk of ash.
"No volcanic ash has been detected with the radar system at the moment....Seismic eruption tremor is low indicating effusive eruption without significant explosive activity," the crisis centre said.
The eruption is at the tip of a magma dyke around 40 km from the main Bardarbunga crater and activity subsided to relatively low levels after peaking between 0020 and 0200 GMT, Iceland Met Office seismologist Martin Hensch said.
He said that it was impossible to say how the eruption would develop.
"One of the concerns is that the fissure opens into the glacier but presently there is no sign of that happening," he said, adding that the eruption was 6-8 km from the glacier.
Nick Petford, a vulcanology expert at the University of Northampton in Britain, said fissure eruptions were often spectacular, but relatively low key and often died out in a couple of days. "If it carries on like this, it is very unlikely it will constitute any major hazard to aircraft."
But there could be a sting in the tail, he said.
"Exactly the same thing happened in 2010 with the Eyjafjallajokull volcano," Petford said. "The main eruption was in April, but in March there was a fissure eruption which was a precursor to the much larger eruption."
The Eyjafjallajokull eruption was particularly disruptive because it pushed ash up to just the elevation used by transatlantic aircraft, while prevailing winds propelled the cloud into European air space. The ash was also particularly sticky due to its chemical composition.
Petford said that if the current eruption subsided, scientists would be looking for signs of more quakes deeper under the volcano, which would suggest more magma was welling up, and for any swelling of the volcano that could be measured using GPS.
"Those are pretty clear evidence that large amounts of magma are being stored within the volcano and that's a good indication it will explode."
(Reporting by Simon Johnson, Anna Ringstrom and Alistair Scrutton, editing by Mark Heinrich)