TOKYO (Reuters) -Nippon Steel's ( NISTF ) president said on Monday that the Japanese steelmaker and the U.S. government share a mutual understanding that its planned acquisition of U.S. Steel will strengthen the American steel industry and manufacturing sector.

"In my opinion, the U.S. government and we are moving closer to a mutual understanding that our acquisition of U.S. Steel will help strengthen the U.S. steel industry and manufacturing through investment, including equity participation," Nippon Steel ( NISTF ) President Tadashi Imai told reporters.

Japan's biggest steelmaker and U.S. Steel will continue negotiations with the U.S. government to reach an agreement on the terms of the equity purchase and future investment plans, he added, while declining to provide any further details.

The administration of U.S. President Donald Trump filed a motion to extend two deadlines in U.S. Steel and Nippon Steel's ( NISTF ) lawsuit against a U.S. national security panel to give the government more time to wrap up merger talks with the firms, a filing showed last week.

The filing is the clearest indication that Trump may allow the deal, scuttled by his predecessor Joe Biden, to proceed in some form.

In February, Trump, alongside Japanese Prime Minister Shigeru Ishiba at the Oval Office, said that Nippon Steel's ( NISTF ) $14.9 billion bid for U.S. Steel would take the form of an investment instead of a purchase.

Trump also said in mid-February that he would not mind if Nippon Steel ( NISTF ) took a minority stake in U.S. Steel.

Imai, however, said late last month that the Japanese company's current merger agreement with U.S. Steel will serve as a starting point for discussions with the U.S. government including the Department of Commerce.

(Reporting by Yuka Obayashi and Kantaro Komiya; Editing by Himani Sarkar and Saad Sayeed)