Dec 14 - American Apparel Inc is setting the online bar higher as it launches a deal this week with discount coupon provider Groupon in the UK, other European Union states and parts of Latin America.

American Apparel's storefront on Melrose Avenue, Los Angeles

Privately-held Groupon Inc, which sources had told Reuters was in talks to be bought by Google Inc for a reported $6 billion, sends its members daily e-mails detailing discounts on goods and services ranging from salon treatments to restaurants and clothes.

American Apparel plans to run a 25-for-50 pounds offer in Britain on Wednesday, followed a day later by launches in the rest of the EU, Brazil and Mexico -- in time to tap the market in the run-up to the Christmas shopping season.

The deals are activated only when a minimum number of people agree to make a purchase, giving Groupon the clout to negotiate steep group discounts on products and services.

Los Angeles-based American Apparel, known for its edgy advertising and bright T-shirts, first launched a similar deal in the United States last month -- seeking innovative technologies and marketing to turn around sagging sales.

American Apparel, with its "Made in USA" clothing and socially progressive stance, sold about 130,000 Groupon coupons in the United States, including more than 15,000 in New York City, the company said.

That accounted for the "best Cyber Monday it has ever had," spokesperson Ryan Holiday told Reuters.

American Apparel saw an average increase of nearly $20 per customer, meaning customers spent roughly $70 with the deal when it ran last month.

"We're very happy with the preliminary results from Groupon, which have not only shown larger than average orders ... but introduced us to verifiably new customers who don't typically visit our stores," American Apparel President Tom Casey wrote in an email in response to a Reuters query.

Groupon said in August it bought two rival firms in Japan and Russia.

(Reporting by Nivedita Bhattacharjee in Bangalore, Editing by Ian Geoghegan)