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US president grants extension request

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European Commission chief says EU will move rapidly

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European shares recoup losses, euro rises

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US and EU trade representatives to speak on Monday

By Philip Blenkinsop and Christoph Steitz

BRUSSELS, May 26 (Reuters) - A weekend telephone call

between U.S. President Donald Trump and EU chief Ursula von der

Leyen gave 'new impetus' to trade talks, the EU said on Monday,

after Trump dropped his threat to impose 50% tariffs on imports

from the European Union next month.

Trump restored a July 9 deadline to allow for talks between

Washington and the 27-nation bloc to produce a deal after what

he said was "a very nice call" with von der Leyen on Sunday

which an EU spokesperson said had been initiated by her.

The euro hit a one-month high against the dollar on Monday,

while European shares surged and were poised to recoup the

previous session's losses. Gold prices fell as Trump's latest

move reduced demand for the safe-haven asset.

The US and EU trade representatives were due to hold talks

on Monday afternoon, European time, the European Commission

spokesperson said, declining to give any information about the

content of the call between Trump and von der Leyen.

"There's now also a new impetus for the negotiations, and we

will take it from there," the spokesperson said.

"They agreed both to fast track the trade negotiations and

to stay in close contact."

German Economy Minister Katherina Reiche called for tariff

negotiations to proceed calmly. "We have to find a common path,"

she said.

Trump had said on Friday that he was recommending a 50%

tariff effective from June 1, expressing frustration that trade

negotiations with the EU were not moving quickly enough. The

threat roiled global financial markets and intensified a trade

war that has been punctuated by frequent changes in tariff

policies toward U.S. trading partners and allies.

The U.S. president's softened stance two days later marked

another temporary reprieve in his erratic trade policy, even if

the latest whipsawing in decision making reminded policymakers

and investors how quickly circumstances could change.

"It is possible that a deal with the European Union will be

reached by 9 July," Commerzbank currency strategist Michael

Pfister said.

"However, it is questionable what has changed in terms of

the fundamental problems following a phone call. One thing

should be clear after Friday's announcement: the brief respite

from tariffs that we enjoyed was only temporary."

EU COMPANIES ON EDGE

EU trade chief Maros Sefcovic was scheduled to have a video

conference on Monday with the CEOs of Mercedes-Benz,

Volkswagen, BMW and Stellantis ( STLA ),

as businesses wondered what plans, if any, they should make.

Despite the relief, Germany's family-owned LAPP Group, which

makes everything from cables and wires to robotics for

factories, warned that some of its specialised products would

still be affected by the planned tariffs, and the volatile

business environment.

"Unfortunately, current U.S. politics is characterised by

unpredictability, individual interests and populism," CEO

Matthias Lapp told Reuters.

"Germany's good transatlantic relations have been built up

over decades of diplomatic work and mutual understanding.

However, confidence in their stability is currently suffering

massive damage."

Trump, who has repeatedly expressed disdain for the EU and

its treatment of the United States on trade, relented after

European Commission President von der Leyen told him on Sunday

that the EU needed more time to come to an agreement.

She asked him during a call to delay the tariffs until July,

the deadline he had originally set when he announced new tariffs

in April. Trump told reporters he had granted the request.

"I agreed to move it," Trump said before returning to

Washington after a weekend in New Jersey. "She said we will

rapidly get together and see if we can work something out."

Von der Leyen said in a post on X that she had a "good call"

with Trump and that the EU was ready to move quickly.

"Europe is ready to advance talks swiftly and decisively,"

she said. "To reach a good deal, we would need the time until

July 9."

UNCERTAIN IMPACT

The negotiations had been stuck, with Washington demanding

unilateral concessions from Brussels to open up to U.S. business

while the EU seeks an agreement in which both sides could gain,

according to people familiar with the talks.

The EU already faces 25% U.S. import tariffs on its steel,

aluminium and cars and so-called "reciprocal" tariffs of 10% for

almost all other goods, a levy that had been due to rise to 20%

after Trump's 90-day pause expires in July.

The levy could increase to 50% in a no-deal scenario, which

could raise consumer prices on everything from German BMWs

and Porsches to Italian olive oil and hurt

demand for French luxury handbags .

It was not clear, however, whether the 50% tariff threat

would apply to all EU imports or just those subject to the U.S.

'reciprocal' tariff, which does not apply to steel and cars and

other products subject to investigations, such as

semiconductors, pharmaceutical products and lumber.

(Additional reporting by Jan Strupczewski, Amanda Cooper,

Charlotte Van Campenhout, Nikhil Sharma, Christop Steitz, Ludwig

Burger, Richard Lough, Christian Kraemer; Writing by Ingrid

Melander; Editing by Philippa Fletcher)