BERLIN (AP) _ Libya agreed Tuesday to pay $35 million in compensation for victims of a 1986 bombing in Berlin that killed two U.S. servicemen and a Turkish woman and injured 229 others, the Libyan ambassador to Germany said.

The deal applies to Germans who were wounded in the April 5, 1986 attack on the LaBelle disco and the family of the slain Turkish woman, but not the families of two Americans, Ambassador Said Abdulaati told The Associated Press.

It is the latest step in an effort by Libyan leader Moammar Gadhafi to end his country's pariah status, following agreements to settle the Pan Am and UTA airliner bombing cases.

The deal came in negotiations in Berlin between Libyan officials and lawyers for the German victims. ``This is a good step,'' Abdulaati said.

A German lawyer involved in the talks also said the two sides had settled.

``I can confirm that there has been a settlement for $35 million in the La Belle case,'' Sven Leistikow told The Associated Press by telephone.

The latest talks were held at a secret location in Berlin.

The La Belle was a hangout for U.S. soldiers when they were stationed in West Berlin during the city's Cold War division.

In retaliation for the bombing, U.S. warplanes carried out airstrikes in Tripoli, killing 37 people, including an adopted daughter of Gadhafi.

A Berlin court ruled in 2001 that the bombing was organized by the Libyan secret service and aided by the Libyan Embassy in then-communist East Berlin. It convicted four people of carrying out the bombing, and a federal court upheld their sentences last month.