JAKARTA (REUTERS) - Indonesia is prepared to walk away from talks on a free trade deal with the European Union over the bloc's stance on palm oil, while also launching a probe into subsidies on dairy imports from the EU, a trade ministry official said.

Trade tensions have risen since the European Commission concluded that palm oil causes excessive deforestation and should not be considered sustainable, meaning palm-based diesel in transport fuel would be phased out between 2023 and 2030.