UPDATE 2-China agrees to talks on French wine dispute, EU says

(Reuters) - China has agreed to discuss dropping its inquiry into whether Europe is dumping wine, the EU's trade chief said on Monday, after EU and Chinese officials made a deal to avoid tariffs on solar panels from China.

After resolving their biggest trade dispute yet, Beijing and Brussels will tackle accusations that French, Spanish and Italian wine is being exported for sale at below the cost of production, as well as another dispute over exports of polysilicon, a raw material used in solar panels.

"There is a window for discussions between the European Union and Chinese (wine) producers," EU Trade Commissioner Karel De Gucht told a news conference. "The Chinese government has promised to facilitate such discussions," he said.

China's openness to resolving a string of related disputes could signal an easing of tensions between two of the world's biggest economies, but their relationship remains delicate as both sides seek to protect industries from unfair competition.

Europe is China's most important trading partner, while for the EU, China is second only to the United States, but ties are strained as China seeks to increase its production of sophisticated products that Europe makes.