WASHINGTON—President Trump said he supported what he described as an emerging agreement that would allow Nippon Steel to invest in—but not fully own—U.S. Steel, potentially opening up a new path for the Japanese company to enter the American steel market.

U.S. President Donald Trump said Nippon Steel's $14.9 billion bid for U.S. Steel would take the form of an investment instead of a purchase on Friday, even as two sources familiar with the matter said the Japanese steel company had not withdrawn its bid.

Nippon Steel “is going to be doing something very exciting about U.S. Steel,” Trump said at a news conference with Japanese Prime Minister Shigeru Ishiba.