Berlin  - Israeli Prime Minister Benjamin Netanyahu arrived in Berlin on Wednesday, ahead of talks with German Chancellor Angela Merkel on efforts to reach peace in the Middle East.

Netanyahu kicked off his two-day stay by meeting German President Horst Koehler at the head of state's official residence.

Netanyahu is on a four-day European tour, and met with US envoy George Mitchell earlier Wednesday in London where the two men reported "progress" towards a resumption of peace talks with the Palestinians.

Merkel preceded the visit by calling for a greater readiness for compromise on Netanyahu's part, in an interview with German television.

Media reports on Wednesday suggested that the US and Israel were in fact close to a compromise deal on the sensitive issue of Israeli settlement construction, the suspension of which is a key Palestinian precondition for going back to the negotiating table.

Merkel told the N24 broadcaster that "we shouldn't let the window of opportunity pass," and renewed calls for the so-called two-state solution to be implemented.

"The time is absolutely right. Let us do everything to use it," Merkel said.

On Thursday the Israeli premier is scheduled to hold talks with German Foreign Minister Frank-Walter Steinmeier, before meeting Merkel in the afternoon.

This is Netanyahu's first official visit to Germany since his re- election as prime minister in March.  (dpa)