HAMBURG The United States is making very good progress on trade issues with Mexico, President Donald Trump said on Friday after a meeting with Mexican President Enrique Pena Nieto, but he also repeated a pledge to make the southern neighbor pay for a border wall.

"We're negotiating NAFTA and some other things with Mexico and we'll see how it all turns out, but I think that we've made very good progress," Trump said on Friday after the meeting at the Hamburg summit of 20 large economies.

In response to a shouted question from a reporter to Trump about whether he still wants Mexico to pay for his proposed border wall, the U.S. leader said, "Absolutely."

Pena Nieto, whom Trump called his "friend," added that the meeting would "help us continue a very strong dialogue" on the North American Free Trade Agreement.

Disputes over migration, Trump's proposed border wall - which Mexico has repeatedly said it will not pay for - and his claim that free trade with Mexico costs jobs in the United States, have strained relations between the two countries since Trump's November election.

Pena Nieto's spokesman, Eduardo Sanchez, called in to local Mexican broadcaster Radio Formula from Hamburg, stating that the two presidents did not discuss the proposed border wall.

"That subject was not part of the conversation," he said.

"The wall was not the issue," said another Mexican official familiar with the meeting, adding that the meeting went well.

The two leaders reviewed progress made on all the issues on the bilateral agenda, the official said.

Trump and Pena Nieto also discussed the start date for the NAFTA talks, the official said.

The two presidents also explored a possible guest worker program for migrants in the agriculture sector as well as the importance of "modernizing" NAFTA, according to a statement from Mexico's foreign ministry released after the meeting.

(Reporting By Roberta Rampton in Hamburg; Additional reporting by Dave Graham and Adriana Barrera in Mexico City; Editing by Noah Barkin and Jonathan Oatis)

Wall Street extended gains in late morning trading on Friday, powered by robust jobs data and a rebound in technology stocks.

NEW YORK The New York Federal Reserve said on Friday it increased its estimates on the U.S. gross domestic product for the second quarter and third quarter to their highest levels in a month based on the latest U.S. payrolls, service and factory activity data.

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Trump hails NAFTA progress, says Mexico will pay for wall - Reuters