* Trump relents on EU car tariffs, agrees to talk on trade
* German foreign minister welcomes Trump-Juncker initiative
* Economy minister: breakthrough "great for global economy"
* Shares in European carmakers rise
* German BDI industry group: "Now deeds must follow words" (Adds share price gains, German industry groups)
By Madeline Chambers and Paul Carrel
BERLIN, July 26 (Reuters) - Germany welcomed an initiative agreed between U.S. President Donald Trump and the head of the European Commission to ease the threat of a trade war and shares rose on the news, but business groups urged the two sides to back up their words with deeds.
After a meeting with European Commission President Jean-Claude Juncker at the White House on Wednesday, Trump agreed to refrain from imposing car tariffs while they start talks on cutting other trade barriers.
European stocks jumped in morning trade on Thursday, with the trade initiative buoying shares in carmakers. Shares in Fiat , Porsche, Volkswagen and BMW all rose by between 2 and 5 percent.
Daimler was up just 1.03 percent in volatile trade at 0915 GMT after its second-quarter profit was hit by weaker pricing and tariffs.
Trump and Juncker said talks would seek to "resolve" U.S. tariffs on steel and aluminum and Europe's retaliatory duties, a step back from Trump's import protections for U.S. metal producers.
"This is not yet the result we are aiming for but it has made a positive result in the whole discussion...on free trade or protectionism more likely than before," German Foreign Minister Heiko Maas told a news conference in Seoul.
"America and Europe are not opponents...We are partners and allies with common values and interests," Maas said, adding it was good that the two would also work on unfair trade practices and on a reform of the World Trade Organisation.
"The answer to America First can only be: Europe United," he said.
German Economy Minister Peter Altmaier was even more enthusiastic, hailing the talks as a "breakthrough" that could avoid a trade war and save millions of jobs. "Great for global economy," he tweeted late on Wednesday.
U.S. import tariffs of 25 percent on steel and 10 percent on aluminum imposed in March will stay in place during the talks, and Trump said Europe had agreed to raise purchases of liquefied natural gas and lower trade barriers to American soybeans.
Germany's deputy government spokeswoman Ulrike Demmer tweeted "The German government welcomes the agreement on a constructive course of action on trade. The European Commission can count on our continued support."
Germany's VDA automotive association welcomed the EU-U.S. agreement to take steps to ease the threat of a transatlantic trade war, saying it offered a real opportunity to avert further tariffs.
"Now the agreement must be filled with life and negotiations must start quickly," the VDA said in a statement.
Germany's car industry, including BMW, Daimler and Volkswagen, accounts for some 800,000 jobs.
The DIHK chambers of Commerce gave a cautious welcome, saying however, that U.S. auto tariffs were not totally off the table.
"The proposed solutions move in the right direction but a significant proportion of scepticism remains," the DIHK said.
Germany's BDI industry association welcomed the outcome of the Trump-Juncker talks but added that action must follow the words.
"The willingness of the EU and U.S. to talk about reducing transatlantic trade barriers is an important signal to ease tense relations. The duties spiral seems to have been stopped for the time being. Now deeds must follow words," said the BDI.
In Austria, steelmaker Voestalpine added: "It is certainly too early to sound an all clear. The announcements were too vague, and the last months have clearly shown that things change on a daily basis." (Additional reporting by Kirsti Knolle in Vienna; editing by Emelia Sithole-Matarise and Hugh Lawson)