WASHINGTON (AFP) - US President Barack Obama declared that the United States and Europe will launch talks on what would be the world's largest free trade zone.

"Tonight, I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union - because trade that is free and fair across the Atlantic supports millions of good-paying American jobs," Mr Obama said in his State of the Union speech on Tuesday.

The move answered mounting calls from Europe to pursue a grand trade pact to spur growth on both sides of the Atlantic - covering a region where two-way trade hit US$646 billion (S$800billion) last year.

Mr Obama added that he would continue to pursue completion of the current Trans-Pacific Partnership free trade group talks, saying it was important "to boost American exports, support American jobs and level the playing field in the growing markets of Asia."