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UPDATE 1-Nasdaq withdraws listing ban on Luokung after U.S. judge's decision

(Adds status of Xiaomi case)

By Karen Freifeld

WASHINGTON, May 6 (Reuters) - Nasdaq Inc has withdrawn a decision to delist the shares of Luokung Technology Corp, the Chinese mapping technology company said on Thursday, after a U.S. judge suspended an imminent investment ban imposed under the former Trump administration.

The ruling and listing news sent shares of the company nearly 20% higher. Luokung, in a news release on Thursday, said Nasdaq had notified the company that it has withdrawn its delisting letter and shares would continue to trade on the market, and would not be suspended on May 7. A Nasdaq spokesman declined to comment.

A spokesperson for the U.S. Department of Justice did not immediately respond to a request for comment.

Luokung is the second company on a U.S. list of alleged Communist Chinese military companies subject to an investment ban to win a preliminary injunction halting the designation.

U.S. District Court Judge Rudolph Contreras in Washington issued a similar order in March in favor of Beijing-based smartphone maker Xiaomi Corp.

In granting an injunction in the case brought by Luokung's challenge of the ban, Contreras said the Department of Defense's designation process was flawed.

“Many of the associations the Department of Defense seemed most troubled by - such as Luokung’s purported forays into space systems or its potential future contracts with the Chinese National Geospatial Information Center ... do not appear to have materialized, nor are they likely to bear fruit before this case can be decided on the merits,” Contreras wrote in his decision.

He added the government has not identified a single technology transfer from Luokung to the People's Republic of China.

In the Xiaomi case, the U.S. acting solicitor general decided that the government would not appeal the preliminary injunction, according to an April 27 filing. Given that decision, the U.S. said it was still deciding the path forward and whether the case could be resolved. A new status report is due May 11.

More than 40 companies were added to a U.S. Department of Defense list of alleged Chinese military-controlled companies in the waning days of the Trump administration, making them subject to an executive order barring Americans from buying securities in such companies.

(Reporting by Karen Freifeld in New York Editing by Matthew Lewis and Leslie Adler)