-- Trump: Chinese officials contacted US trade counterparts

-- "I think we are going to have a deal" - US president

-- China says resolutely opposes escalation of trade war

The United States and China sought to ease trade war tensions on Monday, with Beijing calling for calm and US President Donald Trump predicting a deal after markets fell in response to new tariffs from both countries.

Trump, speaking on the sidelines of the G7 summit of world leaders in France, said Chinese officials had contacted US trade counterparts overnight and offered to return to the negotiating table.

Vice Premier Liu He, who has been leading the talks with Washington, said on Monday China was willing to resolve the trade dispute through "calm" negotiations and resolutely opposed the escalation of the conflict.

Trump welcomed that language and, days after referring to President Xi Jinping as an enemy, heaped praise on his Chinese counterpart.

"They want calm, and that's a great thing, frankly. And one of the reasons that he's a great leader, President Xi, and one of the reasons that China's a great country is they understand how life works," Trump said.

"China called last night our top trade people and said 'Let’s get back to the table', so we’ll be getting back to the table, and I think they want to do something," he said.

In Beijing, Foreign Ministry spokesman Geng Shuang said he had not heard that a phone call between the two sides had taken place. However, China's Commerce Ministry typically releases statements on trade calls. It did not immediately respond to a request for comment.

The increasingly bitter trade war between the world's two largest economies escalated on Friday, with both sides levelling more tariffs on each other's exports.

Trump announced an additional duty on some $550 billion of targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of US goods.

On Sunday, the White House said Trump regretted not raising the tariffs even more. But the president also appeared to back off of his threat to order US companies out of China.

Liu, speaking at a tech conference in southwest China's Chongqing, said nobody benefited from a trade war.

"We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war," Liu, who is Xi's top economic adviser, said, according to a government transcript.

"We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world," he said.

The trade war has damaged global growth and raised market fears that the world economy will tip into recession.

Geng, the Chinese Foreign Ministry spokesman, said China would retaliate if Trump enforced the latest US tariffs.

Asked if he would abandon the tariffs, Trump said: "Anything is possible. I can say we are having very meaningful talks, much more meaningful I would say than any time frankly."

MARKETS REEL

Before Trump spoke on Monday, global stock markets reeled, while China's yuan currency fell to an 11-year low. Investors streamed into the safe harbours of sovereign bonds and gold.

The US president, who at times predicts a deal will happen and at other times says he is happy with the tariff situation, said talks would start again soon and a deal would come.

"I think we are going to have a deal," he said.

The two sides had been slated to meet in September in Washington, but it was unclear last week whether the new tariff tit-for-tat would alter those plans.

The United States accuses China of multiple economic sins, including intellectual property theft, currency manipulation, and forced technology transfer by US companies to their Chinese partners as a requirement for doing business in China. China denies the US allegations.

Beijing and Washington were close to a deal last spring but US officials said China backed away from an agreed text over a reluctance to change laws to address US complaints.

The trade war has affected businesses all over the world and disrupted supply chains. Trump recently urged US companies to move their operations out of China, but it was not clear how or whether his efforts to order such a move would work.

Liu said on Monday: "We welcome enterprises from all over the world, including the United States, to invest and operate in China.

"We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain."

US Treasury Secretary Steven Mnuchin said Trump could order companies out of China under the International Emergency Economic Powers Act if he declared a national emergency.

Chinese state media on Monday hit out at the United States.

The official China Daily said Washington would "never be allowed to control China's fate".

"It has become unquestionably clear that his administration's tariff war against China is politically motivated. What Washington wants from its largest trade partner is for it to be content to play second fiddle and meekly do as it demands," the English-language paper wrote in an editorial.

The Global Times, a widely-read tabloid published by the ruling Communist Party's official People's Daily, said: "US companies are welcome to invest and operate in the Chinese market, but if some US companies want to obey Trump's order and join Washington's trade war, the result is bleak. A decision to give up the Chinese market is just suicide."