(Updates with new details in paragraphs 3,6,18)
By Erik Kirschbaum
BERLIN, June 24 (Reuters) - Facing intense criticism for a regional strike causing disruption across Germany, engineering union IG Metall said on Tuesday it would suspend the walkout at a key eastern plant and was ready to resume talks.
IG Metall said the strike in formerly communist eastern Germany, aimed at cutting weekly working hours from 38 hours to match the 35-hour week in the west, would be halted at the car parts supplier ZF Friedrichshafen, a step that may allow southern German carmaker BMW AG to resume production.
The move was also seen by union officials as a gesture that IG Metall was interested in creating a positive climate for the next round of talks. The employers association said the talks would most likely be restarted on Friday in Berlin.
The strike has been going on in the east for the last three weeks but had drawn little nationwide attention until it forced a halt to production on Monday of 800 3-Series cars per day at BMW's Munich factory and 850 of the mid-sized cars in Regensburg.
ZF supplies gearboxes for BMW cars and the strike at its plant had made it impossible for BMW to continue production.
Even though only 9,440 eastern German workers are on strike, about 10,000 western German workers were idled by the stoppage, which is threatening to deal a heavy blow to the vital car industry -- a major export industry.
After the announcement that the strike would be suspended at the parts supplier, BMW in Munich said it expected to re-start production of its 3-series model on Monday.
The growing impact of the strike, along with increasing appeals from political leaders to end the dispute, raised pressure for a settlement on the two sides, who signalled on Tuesday they would resume their talks later this week.
"In this individual case we decided on a suspension (of strike action)," IG Metall chairman Klaus Zwickel said on the sidelines of a union meeting in the southwestern town of Sindelfingen.
Zwickel said IG Metall was considering making similar moves at Volkswagen's eastern plants in Chemnitz and Mosel.
Engineering employers said they hoped to resume talks on Thursday or Friday with IG Metall to try and end strike action.
"The negotiations will be resumed and the employers are ready," said Werner Riek, spokesman for the employers' group Gesamtmetall.
IG Metall spokesman Claus Eilrich said the union would not be able to agree on a date to resume talks until Wednesday.
IG Metall has said it was ready to consider cutting the working week in stages and at varying speeds depending on the economic position of individual plants.
Engineering workers in the east currently work three hours longer a week than their counterparts in the west, a difference employers say is justified because of lower productivity. Eastern workers complain they feel like second-class workers nearly 13 years after German unification.
Unemployment in the former Communist east is about 20 percent. BMW has said the strike might make it reconsider the scale of its investment in the eastern city Leipzig, where it is building a new factory due to create 5,500 jobs.
"The strikes will have an almost catastrophic efect on the east," said Hans-Werner Sinn, president of the Ifo economic institute said. "BMW is now regretting its decision to locate its plant in east Germany. It chose Leipzig for patriotic reasons but the Czech Republic would have been cheaper."
The German car industry accounts for 10 percent of total industrial output and hundreds of thousands of jobs.
Economy Minister Wolfgang Clement warned on Tuesday that Germany's standing as a place to do business and invest in was at risk from the engineering strike. Clement said he was aware it was unusual for politicians to intervene in labour disputes.
"But this is so unusual that I see it as my duty to warn that Germany's standing as a business location and especially eastern Germany's standing must not be allowed to be endangered," he said.