(Updates prices)

By Rocky Swift

TOKYO, May 26 (Reuters) - Japan's Nikkei share average

extends gains to a second consecutive session on Monday as

easing trade tensions between the United States and the European

Union supported risk appetite.

Nippon Steel ( NISTF ) jumped as much as 7.4% after U.S.

President Donald Trump appeared to give his blessing to the

company's protracted takeover of U.S. Steel, and closed

2.1% higher.

Demand for equities also rose broadly after Trump on Sunday

extended a tariff deadline on EU imports to July 9, just two

days after he pushed for a 50% levy on the bloc.

The Nikkei 225 closed 1% higher, its sharpest

one-day advance in almost two weeks. The broader Topix

rose 0.6%.

Japanese government bonds also rallied, following a dramatic

week in which super-long yields rose to all-time highs.

"The market is now becoming more and more doubtful about the

seriousness of the tariff policy, particularly after (Trump)

dropped the tariff rates on China," said Nomura chief macro

strategist Naka Matsuzawa.

"The bond market started to stabilise after steepening quite

a lot on the long end, rallying for two consecutive days, so I

think that gave relief to the stock market as well," he added.

The Japanese yen remained near a one-month high against the

dollar, curbing demand for export-related shares like Mazda

Motor ( MZDAF ), which lost 0.4%.

The biggest gainers in the Nikkei were Keisei Electric

Railway ( KELRF ), which surged 5.8%, and chip-equipment maker

Lasertec ( LSRCF ) which jumped 5%.

Among the biggest losers on the index were department store

operators Isetan Mitsukoshi Holdings ( IMHDF ) and J.Front

Retailing Co ( JFROF ) which lost 4.4% and 2.5%, respectively.

(Reporting by Rocky Swift; Editing by Janane Venkatraman and

Varun H K)