Japan's Nikkei rises for second day as trade fears ease, Nippon Steel jumps

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 5401.T 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 X.N, 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 .N225 closed 1% higher, its sharpest one-day advance in almost two weeks. The broader Topix .TOPX 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 7261.T, which lost 0.4%.

The biggest gainers in the Nikkei were Keisei Electric Railway 9009.T, which surged 5.8%, and chip-equipment maker Lasertec 6920.T which jumped 5%.

Among the biggest losers on the index were department store operators Isetan Mitsukoshi Holdings 3099.T and J.Front Retailing Co 3086.T which lost 4.4% and 2.5%, respectively.