UPDATE 3-Former West German Chancellor Helmut Schmidt Dies at 96

* One of architects of post-war European integration

* Co-founded European currency system that led to euro

* Faced down RAF guerrilla threat to West German democracy (Recasts, adds comment from Merkel)

BERLIN, Nov 10 (Reuters) - Former West German Chancellor Helmut Schmidt died on Tuesday aged 96 and leaders from around Europe praised him as an architect of international cooperation and post-war European integration.

Schmidt was then-West Germany's second centre-left government leader from 1974 to 1982, taking office at the height of the Cold War when fellow Social Democrat (SPD) Willy Brandt was forced to resign after a close aide was exposed as a spy for Communist East Germany.

At the same time, Schmidt dealt with the consequences of the 1973-74 energy crisis caused by the OPEC oil embargo, and later faced down a serious threat to West German democracy from a spree of attacks by Red Army Faction urban guerrillas.

"We are mourning Schmidt and are proud that he was one of us. We will miss his powerful judgement and advice," tweeted current German SPD leader and Vice Chancellor Sigmar Gabriel.

German Chancellor Angela Merkel praised Schmidt as a mastermind of international cooperation whose decisions continued to have an effect today.

His death prompted tributes from across Europe.

"A great German statesman has gone," French President Francois Hollande said. "He led his country at a very difficult time and he led it towards economic stability and towards the choice of growth."

Hollande added that Europe owed the existence of the euro common currency to Schmidt.

German media said Schmidt caught an infection after having surgery to remove a blood clot from his leg about two months ago. He died in the northern port of Hamburg, his hometown.

Schmidt, a chain smoker in the public eye well into his 90s, became a frequent talk show guest touching on world affairs. He seemed to garner more respect among Germans as an elder statesman than he had when he led the country.

In his later years he was also publisher of Die Zeit, Germany's biggest and most august liberal weekly.

As chancellor, Schmidt tried to balance a conciliatory tone towards the Soviet Union and East Germany - building on Brandt's Nobel Peace Prize-winning "Ostpolitik" - with a strengthening of West Germany's standing within NATO and the European Union.

Schmidt, who was also finance minister in 1972-74, was in office at the time of West Germany's post-World War Two "economic miracle" although, recognising a downturn in the 1970s, he tried to make some cuts to its costly welfare state.

His most formidable challenge was the ultra-leftist Red Army Faction (RAF), whose escalating attacks on the political and business establishment included a campaign of assassinations and kidnappings that peaked in the "German Autumn" of 1977.

Schmidt's refusal to bend to RAF demands for releases of jailed guerrillas was hailed at home. It cemented his reputation as a resolute and unflappable leader and boosted West Germany's international repute. RAF attacks went on but never with the same potency, and they petered out over the next two decades.

Schmidt was succeeded by conservative Chancellor Helmut Kohl, who presided over German reunification in 1990.

European Commission President Jean-Claude Juncker said of Schmidt that he had lost a friend with political courage.

"The history of this continent shaped him for almost a century and made him a committed European," said Juncker.

He said that Schmidt, together with former French President Valery Giscard d'Estaing, had founded a European currency system and so paved the way for the euro.

Born in Hamburg in 1918, Schmidt served as a front-line soldier for Nazi Germany in World War Two. But the experience convinced him of the importance of European integration to guarantee peace on the continent and of a sturdy alliance with the United States to face the Cold War threat from Moscow.

He was married for 68 years to Loki, his childhood sweetheart. She died in 2010. They had a son, who died in his first year, and later a daughter. (Reporting by Gernot Heller, Holger Hansen, Joseph Nasr, Caroline Copley, Andrew Callus in Paris, Alastair Macdonald in Brussels; Writing by Madeline Chambers; Editing by Paul Carrel and Mark Heinrich)