ANKARA (Reuters) - The New York prosecutor's office has withdrawn an appeal to extend the sentence of a former executive at Turkey's state-owned lender Halkbank, the Turkish state-run Anadolu news agency said on Friday.
A U.S. court sentenced Hakan Atilla, an executive from Halkbank, to 32 months in prison in May for helping Iran evade U.S. sanctions in a case that has strained already tense ties between NATO allies Ankara and Washington.
Halkbank, which denies any wrongdoing, has since faced potential U.S. fines in relation to the case, which Turkish President Tayyip Erdogan has condemned as a political attack against his government.
Anadolu, without citing sources, said the prosecutor's office had been asked by the court to present details of its appeal by Dec. 6 but that the appeal had later been withdrawn.
No further details were immediately available and the New York prosecutor's office was not available for comment.
Last month, Turkish Foreign Minister Mevlut Cavusoglu said after talks with U.S. officials in Washington that the two sides had discussed returning Atilla to Turkey where he can serve the rest of his sentence.
Erdogan also said last month that he had discussed the case of Halkbank with U.S. President Donald Trump, saying the talks were on a "positive path". He said, without elaborating, that Trump had told him "he would instruct the relevant ministers immediately" regarding the case.
Strained ties between Ankara and Washington began to improve after U.S. pastor Andrew Brunson, who was on trial over terror-related charges in Turkey, was released last month.
The NATO allies remain divided on a host of other issues, including U.S. policy in Syria and Turkey's request for the United States to extradite Fethullah Gulen, a cleric Ankara blames for organising the 2016 abortive putsch. Gulen denies involvement.
(Reporting by Tuvan Gumrukcu; Editing by Simon Cameron-Moore)