VIENNA (Reuters) - Europe's Muslims face deep-seated discrimination in education, housing and jobs that can alienate them from the mainstream, but say they could do more themselves to connect with wider society, an EU report said on Monday.

The study by the European Monitoring Centre on Racism and Xenophobia is the first to cover Muslims across the European Union and coincides with growing scrutiny of EU Muslims spurred by terrorism and increased immigration from the Islamic world.

Entitled "Muslims in the European Union -- Discrimination and Islamophobia", the 115-page EUMC report was supplemented by interviews with mainly young Muslims describing experiences of being marginalized even if they were European-born EU citizens.

"A question I have heard many times is, 'When are you going back?' I say, 'I was born in Rotterdam so where would I go?' It's a really painful question and makes you feel like a foreigner ..., accept that you are a foreigner at some point," a Dutch Muslim woman said in the survey.

The EU has 15 million Muslims, the second largest religious grouping in the 25-nation bloc.

Presenting dozens of polls and case studies in various EU nations, the report said many Muslims, especially the young, struggled with myriad barriers to social advancement, giving rise to "feelings of hopelessness and exclusion".

"Islamophobia", borne of an increasing tendency to associate Muslims in general with terrorist acts by a relative few, had intertwined with pre-existing xenophobia to fan discrimination. "Available data shows that European Muslims are often disproportionately represented in areas with poorer housing conditions, while their educational achievement falls below average and their unemployment rates are higher than average."

Such ills have been blamed for rioting in France's heavily immigrant suburbs and violence in Berlin schools.

In France, people with purely French names were five times more likely to be invited to job interviews than those with Muslim-sounding names and similar qualifications, EUMC director Beate Winkler told a news conference.

She said Islamophobia included "discriminatory and aggressive treatment by police", a factor cited in youth unrest.

Headscarves disqualify job-seekers

Interviewees agreed that Muslim women who wear headscarves had the hardest time getting jobs, saying many employers feared they would drive away customers.

In the Netherlands, some young Muslims said they had been placed in school classes segregated along ethnic lines because they were branded "foreign", even though they were Dutch-born.

A German of Turkish heritage said a teacher described to his class how Ottoman forces once marched to the edge of Vienna. "He said: 'Thank God we beat them or you guys would have big problems.' He looked to the boys (in class) and said, 'You all would have been circumcised.' Then he looked to the girls and said, 'You would all have to wear headscarves.'

"When I went home I had a guilty feeling about what a bad culture I come from," the young man told the interviewer.

Islamophobia is mainly verbal rather than violent, but efforts to combat it are handicapped by severe under-reporting of the problem or poor or missing official data, EUMC chairwoman Anastasia Crickley told reporters.

Yet Muslims also saw they could do more to help themselves.

"Interviews show that many Muslims acknowledge they themselves need to do more to engage with wider society, take greater responsibility for integration ..., to move away from being inward-looking," the report said.

In interviews, some Muslims said their community mosques were failing to help them integrate by not considering critical questions they had about coping in secular European society.

The report urged EU policymakers to fully apply anti-discrimination directives, mandate diversity training for police, ensure school classes are ethnically mixed, and compile data identifying Muslims as victims of Islamophobic incidents.